Incentives Trucking Companies Use To give In Drivers
Though often overlooked, the trucking industry is essential to the health on the US economy. Think about it: without truck drivers delivering goods, interstate commerce would grind to a screeching, tire-burning halt.
Unique Challenges
Despite the importance of trucking companies, the way the system is structured often leaves them in a shaky financial position. Truck companies submit invoices for services rendered, and then often wait 30-90 days for payment on the accounts receivables.
For a bigger company with large cash reserves, waiting to be paid would not be a controversy. But for small to mid-size companies operating on a good budget, it might halt an option. Expenses since payroll and gas come in the time between payment, and not paying your drivers is never a good business put into practice. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and it is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside borrowing. The following are some strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . by which businesses sell their accounts receivables to a factoring company. Approval for factoring is founded on on the creditworthiness of the trucking company’s customers.
At the use of the sale, customer gets 80-90% belonging to the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot manage to wait for payment, and also the cost is usually 4-5% monthly with an impressive annual interest rate typically between 18-30%.
Bank Loans
Though in order to find come by, bank loans are often the cheapest involving financing. The borrowed funds process involves an application and overview of the company’s creditworthiness and financial reports. Small companies especially possess a be thrown to the wolves for loans, although exceptions do live.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s financial institution. This form of funding greatest for for trucking outfits using a great credit report . and don’t need the money immediately.
Cash-Advances
Cash advances take place when an organization receives funding sum from the lender. The organization pays the lender back with percentages from their monthly card receipts just before loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they cannot be changed retroactively. The profit to cash advances is immediate cash- the time the fastest method for obtaining cash without going to a loan shark.
This financing method is better for trucking companies who need immediate cash for a much smaller amount of this time and have limited financing options. Will not find is usually 20% if not more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It is better for trucking companies with valuable plant or equipment assets which usually underutilized, and the cost is monthly lease payments in addition to depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, make use of is well over them to search out funding solutions that meet their individual needs. Being informed on all the choices is the first step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
