Incentives Trucking Companies Use To give In Drivers
Though often overlooked, the trucking industry is critical to the health belonging to 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 within 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 huge concern. But for small to mid-size companies operating on a good budget, it might stop an option. Expenses such as payroll and gas calculate 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 actually not a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some choices trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to carpet by which businesses sell their accounts receivables to a factoring company. Approval for factoring draws on on the creditworthiness of the trucking company’s customers.
At the time of the sale, the client gets 80-90% of your cash back immediately from the receipts. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choices best for B2B companies that cannot afford to wait for payment, as well as the cost usually 4-5% monthly with an effective annual interest rate typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are an cheapest way of financing. Mortgage loan process involves an application and analysis of the company’s creditworthiness and financial profile. Small companies especially tend to be turned down for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s banking. This form of funding is better for trucking outfits using a great credit file and don’t require the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum from a lender. The company pays the lending company back with percentages from their monthly card receipts before the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and so they also cannot be changed retroactively. The benefits of cash advances is immediate cash- the time the fastest method for obtaining cash without in order to be a loan shark.
This financing method very best for trucking companies who require immediate cash for the short amount of time and have limited financing options. Cost of is usually 20% and up.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It is best for trucking companies with valuable plant or equipment assets which might be underutilized, as well as the cost is monthly lease payments plus the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and it is almost them to discover funding solutions that meet their individual needs. Being informed on all options is one step toward finding a suitable cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
