Invoice Finance for Haulage Companies 2024 Guide
Invoice finance, within the realm of the transport and haulage sector, acts as a financial lifeline, enabling businesses to liberate the funds entangled in their unpaid invoices. It functions as the fuel that propels your enterprise forward, particularly during periods when clients exhibit tardiness in settling their dues.
In practical terms, invoice finance entities furnish an upfront sum against the invoices you’ve issued, typically up to 90% of their total worth. This infusion ensures a continuous stream of funds, sparing you from being stranded in financial stagnation as you await remittances.
Instead of lingering in financial purgatory, you regain the liberty to embark on your journey, fully concentrating on steering your transport enterprise towards success.
What is invoice finance for transport and haulage businesses?
For transport and haulage companies, invoice factoring for haulage and transport companies is very beneficial to keep a steady cash flow and meet the high cost demands of this type of business. When you are regularly waiting for clients and suppliers to pay their invoices it can put huge pressure on your business potentially making it difficult to meet high day-to-day fuel costs and the quick turnaround times required in this industry.
Fuel costs, exchange rate fluctuations, unfavourable import and export ratios and an economy which ebbs and flows make it increasingly difficult to operate a profitable business.
Why transportation businesses should consider invoice finance
Invoice finance for transportation businesses is essential nowadays in the haulage industry because the main two burdens for growing or startup haulage companies are cash flow and administration.
They need seamless and risk-free courier finance services to increase their cashflow. We know the importance of making sure that your drivers and staff are paid correctly and on time, even when your clients haven’t yet paid for your services.
By using an asset based lending product such as haulage finance within your business could be the answer for a positive cash flow within the business. We also understand that your temporary workers will need paying much quicker than the standard 30 days your clients will take to pay you; potentially causing cash-flow issues.
Transport finance is a perfect fit for any haulage business, it can fill the cash flow hole by advancing up to 95% of the value of the outstanding account once it has been issued to the client. Once you have completed the job and the invoice has been issues to the client, the factor provides the balance of the statement of charges, minus fees.
Logistics businesses have to wait to be paid so 30, 60 or even 90-day payment terms can cripple your business financially, this is where haulage finance will support your business. You can finally sleep at night and no longer worry about cash flow issues.
We know the importance of a steady cash flow available at all times to keep haulage businesses and their vehicles moving; we work with you to make finding you a haulage invoice factoring facility as easy as possible. A secure credit facility provides you with an effective solution speeding up the order-to-payment chain and ensuring drivers can be paid, goods can be moved and vehicles can be refuelled. With years of experience working with haulage, transport businesses like yours and our panel of funders, we make it easy for you to obtain the money you need for your business as quickly as possible.
By making use of an haulage finance this will satisfy the transport commissioner that you have sufficient financial resources available to maintain its vehicles in a fit and roadworthy condition, which is a condition of your operators license.
Types of invoice finance for haulage and transport sector:
The needs of the transport industry tend to vary according to growth stage and their specialist industry sector. To help you work out which type of haulage finance will suit your business, here is a brief guide to the three main options:
Haulage invoice discounting
Invoice discounting for haulage is a confidential finance facility when a company’s unpaid invoices are used as collateral for a loan. Invoice discounting companies enable businesses to leverage the value of their sales ledger.
With an invoice discounting company, when sending out invoices to customers a proportion of the total amount becomes available from the lender, which provides your business with a source of working capital throughout the month while you wait for your client to pay their bill.
The benefit of invoice discounting is you maintain responsibility for your sales ledger as well as any outstanding amounts chased and invoice processing. The main difference between this method and invoice factoring is that your customer is not aware that you have taken on cashflow finance. If you prefer to keep the financial arrangement confidential from your customers then discounting may be the right product for you.
You no longer have to wait up to 120 days to receive settlement for your services, and you remain in charge of your own credit control processes, meaning that you continue to chase late payments and therefore your customers are not made aware of any third party involvement.
Haulage invoice factoring
Invoice factoring for haulage is when a business sells its sales ledger to a third-party company. It’s a form of factoring finance and will give your business an effective way to improve its cashflow position.
How does invoice factoring work, the haulage finance lender will provide the credit control service to recover payment of the unpaid invoice.
Factoring companies allow you to release cash from your unpaid invoices quicker than having to wait between 30 to 90 days – and sometimes up to 120 days – for your customers to pay you.
The invoice factoring provider we handle credit control on your behalf, allowing you to concentrate on other areas of the business instead of chasing up late payments.
Haulage spot factoring
Spot factoring for haulage is a way for a business to access funds by selling unpaid sales debts to a 3rd party, a spot factoring company, on a one off basis in order to receive payment quicker.
The business will agree rates and fees with a spot factoring company and then decide which account it wants to assign to them. The spot factoring company, once your bill for services that have been completed is verified, will advance a proportion of its value, usually around 70-85%, to the business.
The spot factoring company will then chase up the amount from the client and once paid to them in full will reimburse the business with the outstanding balance minus the agreed fees.
Benefits of Haulage Finance
- Cash released in 24 hours after invoices are raised
- Receive up to 95% of the invoice amount
- Credit control can be fully managed or confidentially kept in-house
- Improves cash flow for your business
- Negotiate better terms with your suppliers
- Bad Debt Protection can be added to protect against non-payments
It allows you to release funds against the value of invoices within 24 hours of their issue. This means that, rather than wait for your customers to pay, you gain immediate access to cash that can be used to keep the business running as usual, or to grow your business with new clients and contracts.
When it comes to finding the right type of invoice finance for your business, you may find either invoice factoring or invoice discounting provide a better fit.
With invoice factoring the funder will additionally manage your sales ledger on your behalf, with their credit management resource and expertise reducing in-house overheads and improving collection times in general.
How does transport finance work?
Transfort finance works by allowing haualge firms to bridge the gap between paying suppliers, sub contractors and material merchants and getting paid by your clients.
- You supply your labour, drivers, or lorries to your customers.
- Send your customer a request for payment and send a copy to the finance company or upload to the online portal.
- The lender will advance up to 75% of the outstanding amount.
- Your customer settles the amount in full.
- The payment clears and we give you the remaining 25% balance minus the finance fee.
How much do freight factoring companies charge?
Freight factoring companies charge in accordance to a number of different factors, so their factoring rates and costs are unique to each client using a variable fee structure.
In most cases some freight factoring companies will offer a flat fee structure, their total cost will be primarily based on two thing, the discount/factor rate that they offer you and the second the length of factoring period.
Who is eligible for haulage finance?
Eligibility for haulage finance is subject to status but not as strict as you may think, if the following apply to you:
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You are registered in the UK and hold an O license.
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Minimum turnover £100,000
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Issue invoices.
If you do not qualify for haulage finance, you may be able to get a general working capital facility like a haulage loan
Why should you work with us
We are passionate about helping transportation businesses in the UK, grow and sustain that growth through carefully selected funding solutions and financial services offerings.
As a specialists broker in all things funding we are sure we can find a facility that works for you and your business, to apply for haulage finance the process is quick and easy, simply complete the online enquiry. If you prefer a call back please feel free to get in touch on the number above.
