Invoice finance for transport and haulage companies
Updated: Sep 10
The transport and haulage industry come with its own unique set of characteristics, challenges as well as requirements. Invoice finance can provide businesses in this sector with a tailor made solution to maintain a steady cash flow and reduce disruptions.
Every industry is different- when you are able to identify unique challenges and identify practical funding solutions, this is the mark of a good broker.
The transport industry has one of the slowest customer payment profiles in the United Kingdom, fuel prices are rising and also, the operational costs are high as well. In a time of uncertainty for a UK business, many people in the haulage, distribution and transport sectors are therefore struggling with their cashflow.
As well as wages needing to be paid, other costs such as fuel bills, insurance and vehicle repair bills will all drain cashflow rapidly if there is not a balance of funds coming in. These expenses cannot be delayed, as without them the business will be grind to a halt. To add to this, challenges posted by trading on credit terms would mean that if there was one late payment or an unexpected expense e.g. the cost of a new truck. Operating like this can also make it very difficult to grow your business, as a new contract this will mean that with some of the additional costs, you may not be able to accommodate up front.
For many companies struggling with everything previously mentioned, invoice finance can represent an ideal solution. It allows you to fund against the value of invoices within 24 hours of their issue. This means that, rather you wait for customers to pay, you gain immediate access to cash that can be used to keep the business running as per usual, or to grow your business with brand new customers and contracts.
When it comes to finding the right type of invoice finance, for your business, you might find that either invoice factoring or invoice discounting provide a better fit. With invoice factoring, the funder will additionally manage your company’s sales ledger on your behalf, with their credit management team resource reducing in-house overheads and improving collection times in general.
On the other hand, invoice discounting leaves you in full control of your credit management. The invoice discounting provider will provide the funding against the value of invoices. This will leave you to collect the payment from your costumer. Both of the of the invoice finance products can additionally incorporate bad debt protection, safeguarding cashflow from the risk of low payment and bad debt. However, different solutions might be suited to different businesses depending on their needs and current operations.