Travel and haulage companies have to deal with their own unique set of requirements and challenges.
The regularity and fluctuation of operational costs can disrupt cash flow, as can delays in customer payments. In order to reduce these disruptions, there is a solution that is helping to save this industry and many others: invoice finance.
Current challenges for the haulage industry
Cash flow issues are common in the UK transport industry. The sector is known for possessing one of the country’s slowest customer payment profiles. This issue is then further compounded by the high operational costs of running a travel and haulage company.
These operational costs include employee wages, vehicle repairs, and insurance. Plus, in the case of fuel bills, these costs can fluctuate drastically and quickly scupper even the best-laid plans for cash flow. While customers can delay paying for your services, it’s not possible to delay these expenses – otherwise your company will quickly collapse.
Then there’s also the problem when a curveball is thrown in your direction. If you have to deal with an unexpected expense such as a new vehicle, for instance, or your cash flow challenges lead to a late payment, this can affect any possibilities you have of growing your business.
Fortunately, a solution to these challenges can be found with invoice finance.
What is invoice finance?
Healthy cash flow is essential for any business that wants to remain competitive. This is especially the case for those operating in the transport industry. Sadly, late-paying clients are a common occurrence for travel and haulage companies.
Overdue invoices, which can come with terms that range from 30 to 90+ days before payment is required, lead to your incoming cash being tied up. The lack of money coming in means there’s a struggle to cover operational expenditures.
With invoice finance, however, cash flow problems can be quickly eradicated. It’s a funding solution where you effectively sell your invoices to a financial broker. Along with receiving up to 95% of the invoice’s value, you typically receive the payment within 24 hours. This flexibility places you back in the driving seat and gives you full cash flow control.
The benefits of invoice finance
There are a number of benefits gained from invoice finance. The main advantage, of course, is that you receive access to quick cash flow. You no longer have to wait for your customers to pay after 30, 60, 90, etc., days. Immediate access to your money is gained, which means your business can not only run as normal but also grow as you acquire new contracts and clients.
Another benefit is that you don’t only have to send one or two unpaid invoices. With invoice factoring, you can outsource your entire sales ledger to a financial broker. By taking this approach, you can ensure there are no delays in receiving invoice payments. Although if you want to retain full credit management control, you can stick with invoice discounting.
Even though you don’t receive the full 100% of the invoice, the fee taken is small enough that the benefits gained from invoice finance outweigh this aspect. By receiving up to 95% of the invoice payment, you will still be able to cover your expenses and turn over a profit that ensures business growth.
With healthy cash flow and by staying on top of your expenses, this also opens up the possibility of negotiating better terms with your suppliers. They will be happy you are maintaining payments on time, and they could potentially reward this with a better rate for your business.
Why TSF can make the difference
Over the years, TSF has assisted numerous clients in the travel and haulage industry with their financial issues. We don’t just say we’re financial experts with a lot of experience in the transport industry, either. This is backed up by the fact we are an award-winning company, recognised as the NAFCB invoice finance broker of the year.
To discuss invoice finance further and know which direction to go with that’s best for your travel or haulage business, get in touch today to book a meeting with one of our specialists.