Incentives Trucking Companies Use To create In Drivers
Though often overlooked, the trucking industry is essential 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 chore. But for small to mid-size companies operating on a good budget, it might halt an option. Expenses like payroll and gas calculate in the time between payment, and not paying your drivers is never a good business approach. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is actually not a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies 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 duration of the sale, the client gets 80-90% belonging to the cash back immediately from the statements. The remainder of the balance comes after customer repayment, less a percentage fee that typically ranges from 1-5%.
This choices are best for B2B firms that cannot afford to wait for payment, and also the cost is often 4-5% monthly with a healthy annual rate typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are these cheapest form of financing. The money process involves an application and breakdown of the company’s creditworthiness and financial track record. Small companies especially will usually be rejected for loans, although exceptions do be available.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s financial institution. This form of funding greatest for for trucking outfits along with a great credit history and have no need for the money immediately.
Cash-Advances
Cash advances take place when a small business receives funding sum from a lender. They pays the lender back with percentages regarding their monthly card receipts before the loan (plus a predetermined rate) is repaid. There are legal limits to the rates, and they cannot be changed retroactively. The benefit to cash advances is immediate cash- can be the fastest method for obtaining cash without in order to a loan shark.
This financing method ideal for trucking companies who need immediate cash for the short amount your own time and have limited financing options. The cost is usually 20% or more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is best for trucking companies with valuable plant or equipment assets usually are underutilized, and also the cost is monthly lease payments not to mention the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, that’s why it is close to them to discover funding solutions that meet their individual needs. Being informed on all options is initial step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
