Operating a lucrative commercial transportation or trucking company isn’t as easy as people think. When the average person sees what businesses will pay to have a load hauled from one coast to the other, they might assume that the profit margins in the trucking industry are massive.
However, commercial drivers command competitive wages, and the cost to maintain a fleet of commercial vehicles is often thousands of dollars a month, to say nothing of the insurance costs required to protect against collisions or damage to what your drivers haul. Beyond that, there are fuel costs to consider. Especially when costs rise rapidly, your business may be left struggling to cover those expenses.
You may use revolving lines of credit, credit cards or factoring services for unpaid invoices to help you keep all of your bills paid. In recent years, many trucking companies have turned to unsecured lines of credit, which account for as much as 70% of the short-term financing transportation companies utilize. Those financial obligations can build to a point where you simply cannot fulfill them all. Reorganizing your debt could help you keep your company afloat during difficult times.
Reorganization is a complex process
Revolving lines of credit often come with numerous fees and charges in addition to whatever interest rate you pay have to pay on your monthly balance. Those costs accrue over time, further cutting into your profit margins if you can’t keep your accounts paid in full every month.
Businesses can potentially change their circumstances by reorganizing their debts. Reorganizing your company’s debts often involves intense contract negotiations and a thorough financial review. Your business may have to make some difficult choices, including thinking about ways to streamline expenses so that you can show your creditors you come to the table to negotiate in good faith.
Restructuring your debts can reduce how much you have to pay each month and give your company the financial flexibility it needs to remain solvent and retain its employees and assets. Acknowledging when your company has too much debt can help you embrace debt restructuring as a solution that can protect your company and its assets from legal litigation or creditor claims.
