Incentives Trucking Companies Use To give In Drivers
Though often overlooked, the trucking industry is vitally important to the health within 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 the 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 huge concern. But for small to mid-size companies operating on a decent budget, it might stop an option. Expenses with regard to example payroll and gas provide in the time between payment, and not paying your drivers is never a good business rehearsal. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is a recipe for financial hardship.
Therefore, trucking companies often have to show to outside financing. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to the process by which businesses sell their accounts receivables to a factoring company. Approval for factoring centered on the creditworthiness of the trucking company’s customers.
At the amount of the sale, the client gets 80-90% of the cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choice is best for B2B businesses that cannot manage to wait for payment, as well as the cost is usually 4-5% monthly with an effective annual rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are usually the cheapest form of financing. Mortgage process involves an application and analysis of the company’s creditworthiness and financial reports. Small companies especially can be refused for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s financial institution. This form of funding ideal for for trucking outfits by using a great credit ratings and don’t want the money immediately.
Cash-Advances
Cash advances take place when a small business receives an advance sum from the lender. The company pays loan provider back with percentages of their monthly card receipts prior to loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and so they also cannot be changed retroactively. The advantage of cash advances is immediate cash- it is the fastest method for obtaining cash without likely to a loan shark.
This financing method is best for trucking companies who require immediate cash for any amount associated with your and have limited financing options. The cost is usually 20% or more.
Lease-Back
A trucking company may wish to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It is better for trucking companies with valuable plant or equipment assets which usually underutilized, along with the cost is monthly lease payments additionally, the depreciation and tax burdens of equipment.
Choices, Choices
Every trucking company is unique, make use of is nearly them to search out funding solutions that meet their individual needs. Being informed on all the options is customers step toward finding a worthwhile cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
