Another example is a company’s trucks requiring a pet deposit. When the truck is returned and there is no damage the deposit is returned usually without any interest. Money being held by a third party until certain conditions are met are very common.
Personally, I wish our Escrow was a little higher as it is not enough to cover what we could be charged if in the worst-case scenario our truck was totaled while under a load. When all of the chips are down, getting hit with an astronomical bill to cover freight damage, OmniTraks damage, as well as no truck could be worse than a kick in the stomach.
I have heard of Escrow being confused with maintenance accounts and their description is not even close. If a company has a maintenance account the contractor adds funds to the account and then the funds are used to pay for maintenance to the truck when needed. Personally, I would rather keep my own maintenance fund, get the interest on the account, and use where and when we need it. Having a maintenance fund is not a suggestion it is mandatory to run a good business. Trucks will break down and that is a given, being prepared for a break down is not optional. Even new trucks need a maintenance fund as the labor and parts might be covered by warranty but while the truck is down the expenses still march on.
Escrow can be looked at as another account to be used in an emergency to handle some of the expenses that will occur if there is any damage. When we left our last company, our escrow was returned to us once we returned the OmniTraks, took pictures of our truck with signs removed, and they were sure there were no freight claims. This took about thirty days. When we have changed trucks, we start a new escrow account and the money is returned to us from the previous escrow. The money is always ours unless there is damage to something the company is responsible for.
Fleet Owners also usually require an escrow from their drivers that they hold in case of damage done to the owner’s truck. How much Escrow is required can be many thousands of dollars’ difference depending on the company or the fleet owner. Some return the interest earned as it is earned and others return interest as it is earned. We consider an Escrow account to be like an emergency savings account we home we never have to use.