Incentives Trucking Companies Use Generate 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 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 problems. But for small to mid-size companies operating on a decent budget, it might not be an option. Expenses like payroll and gas provide 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 this 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 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 amount of the sale, customer gets 80-90% of your 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 option 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 interest rate typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are often the cheapest type of financing. The borrowed funds process involves an application and review of the company’s creditworthiness and financial track record. Small companies especially will usually be thrown to the wolves for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s bank account. This form of funding greatest for for trucking outfits by using a great credit report . and do not require the money immediately.
Cash-Advances
Cash advances take place when an organization receives an advance sum from the lender. They pays the lender back with percentages of that monthly card receipts up to the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they cannot be changed retroactively. The benefit to cash advances is immediate cash- the time the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who require immediate cash for a much smaller amount associated with your and have limited financing options. Will not find is usually 20% or older.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for cash.
It ideal for for trucking companies with valuable plant or equipment assets that are underutilized, and the cost is monthly lease payments not to mention the depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is well over them inside your funding solutions that meet their individual needs. Being informed on all the choices is initial step toward finding a sufficient cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
