Incentives Trucking Companies Use Generate In Drivers
Though often overlooked, the trucking industry is vitally important to the health for 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 chore. But for small to mid-size companies operating on a tight budget, it might stop an option. Expenses such as payroll and gas sum up 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 flip to outside borrowing. The following are some methods 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 draws 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 invoices. 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, along with the cost is 4-5% monthly with a healthy annual pace typically between 18-30%.
Bank Loans
Though difficult to come by, bank loans are an cheapest way of financing. The money process involves an application and analysis of the company’s creditworthiness and financial history. Small companies especially tend to 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 bank account. This form of funding is the for trucking outfits by using a great credit ratings and don’t need the money immediately.
Cash-Advances
Cash advances take place when a small-business receives an advance sum from our lender. Business pays financial institution back with percentages of their monthly card receipts just before loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and so they also cannot be changed retroactively. The help cash advances is immediate cash- is certainly the fastest method for obtaining cash without in order to be a loan shark.
This financing method is better for trucking companies who need immediate cash for a short amount of this time and have limited financing options. Will not find 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 cash money.
It is better for trucking companies with valuable plant or equipment assets that are underutilized, along with the cost is monthly lease payments in addition to depreciation and tax burdens of gadget.
Choices, Choices
Every trucking company is unique, however it is up to them to locate funding solutions that meet their individual needs. Being informed on all the choices is one step toward finding the right cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444
