19/08/2013 20:34

 

Though often-overlooked, the trucking industry is very important for the health of the US economy. Consider it: without https://www.hiringtruckdrivers.com delivering goods, inter-state commerce would grind to a screeching, tire-burning halt.

Unique Problems

Despite the significance of trucking companies, how a system is organized usually leaves them in a shaky financial position. Vehicle companies send accounts for services rendered, and then often wait 30-90 days for payment on the accounts receivables.

For a bigger company with huge cash reserves, waiting to be paid would not be a challenge. But for small to mid-size companies operating on a limited budget, it could perhaps not be a choice. Charges including gas and payroll add up within the time passed between cost, and not spending your hiringtruckdrivers.com is never a great business practice. Enhance that increasing energy costs, delays because of driver shortages, traffic congestion and new regulations, and it's a recipe for economic difficulty.

Consequently, trucking companies often have to turn to outside money. Listed below are some choices for trucking companies to consider:

Asset-Based Financing

Also known as factoring, this options describes the method by which firms sell their accounts receivables to a factoring company. Approval for factoring is founded on the creditworthiness of the trucking company's customers.

At the time of the sale, the consumer gets 80-90% of the cash back instantly from the invoices. The remainder of the balance comes after consumer settlement, less a portion charge that on average ranges from 1-5%.

This option is best for B2B companies that can't afford to wait for payment, and the cost is generally 4-5% monthly by having an effective annual rate of interest typically between 18-30%.

Bank Loans

Though hard to come by, bank loans tend to be the cheapest form of financing. The loan process requires an application and review of the company's creditworthiness and financial history. Small companies especially are usually rejected for loans, even though exceptions do occur.

After approval, finance disbursement often takes about 30-90 days to attain a trucking company's banking account. This type of money is most beneficial for trucking clothes with an excellent credit history and do not need the cash immediately.

Cash-Advances

Income developments occur whenever a company receives an advance sum from the lender. Before loan (plus a predetermined rate) is repaid the company pays the lender right back with proportions of their monthly card receipts. There are legal limits for the rates, and they can't be changed retroactively. The advantage to cash advances is immediate cash- it's the fastest method for obtaining cash without going to a loan shark.

More information can be found on this website.

This financing method is better for trucking companies who require immediate cash for a short timeframe and have limited financing options. The cost is generally 20%.

Lease-Back

A trucking company may choose to sell property, plant, and/or equipment, and simultaneously leases it right back for cash.

It's best for trucking companies with valuable plant or equipment assets which are underutilized, and the price is regular rental payments as well as the depreciation and tax burdens of equipment.

Choices, Choices

Every trucking company is exclusive, and it is around them to locate capital solutions that meet their specific needs. Being informed on all of the choices could be the first step toward getting a suitable cash flow solution.