Incentives Trucking Companies Use To bring In Drivers
Though often overlooked, the trucking industry is critical 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 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 problem. But for small to mid-size companies operating on a decent budget, it might ‘t be an option. Expenses such as 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 a recipe for financial hardship.
Therefore, trucking companies often have to show to outside funding. The following are some strategies for trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to difficult . 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 time period of the sale, customer gets 80-90% belonging to the cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This choice is best for B2B firms that cannot manage to wait for payment, and also the cost is often 4-5% monthly with a powerful annual price typically between 18-30%.
Bank Loans
Though tough to come by, bank loans are often the cheapest form of financing. The borrowed funds process involves an application and analysis of the company’s creditworthiness and financial history. Small companies especially will usually be turned down for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s savings. This form of funding is better for trucking outfits having a great credit report . and do not require the money immediately.
Cash-Advances
Cash advances take place when a small-business receives funding sum during a lender. The organization pays loan provider back with percentages associated with their monthly card receipts up to the loan (plus a predetermined rate) is repaid. There are a bunch legal limits to the rates, which cannot be changed retroactively. The benefits of cash advances is immediate cash- it is the fastest method for obtaining cash without going to a loan shark.
This financing method is the for trucking companies who require immediate cash for any amount of one’s time and have limited financing options. Zox pro training system is usually 20% if not more.
Lease-Back
A trucking company may want 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 have been underutilized, as well as the cost is monthly lease payments not to mention the depreciation and tax burdens of resources.
Choices, Choices
Every trucking company is unique, however it is well over 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.
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12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
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