Today we speak with Norman Ramsay about the funding options available to the haulage sector. Norman is one of our financial consultants here at Touch Financial and has over seven years experience in helping businesses find funding solutions. He has a vast amount of experience with funding solutions for businesses such as, asset based lending, invoice finance and trade finance.
What common problems do haulage firms face at the moment?
Working closely with haulage firms for the last few years I have seen what it takes to build a successful firm and what the main pitfalls that many haulage companies face are. A key issue that I have seen repeatedly within the sector is the ever rising cost of fuel. It can be a challenge to keep up with these costs and as such many firms are looking for more fuel efficient forms of transportation. However the move to upgrade your fleet can also be a costly one, so many companies are slowly but surely downsizing.
Another common issue that I regularly tackle is the length of time haulage companies have to wait to get paid. Often it can be between 30 to 60 days which can be extremely detrimental to a company’s cash flow. With rising government costs, costly driver training and plans to increase congestion charges, the haulage industry is most definitely facing a tough time. This is where I come in. I help companies find the right cash flow funding system which will allow them to grow and expand; hassle free.
Which funding solution would you recommend and why?
Whilst there are many options available, I would have to say that there are three that are specific to the Haulage industry.
Firstly there is Asset Finance, a cash flow funding method that allows a company to release funds against its physical assets (In haulage this would usually be vehicles such as trucks or vans). Instead of a paying the full balance to acquire a vehicle or piece of machinery, you will pay an initial deposit (usually 10% – 20% of the vehicles value), and pay back the outstanding balance in monthly instalments over a set period of time.
Next there is Confidential Invoice Discounting (CID), one of the most popular forms of invoice finance. It works by allowing a company to use their invoices as security against which funds can be borrowed. As I previously mentioned an issue which a lot of companies face is the length of time they must wait for payment, CID helps to fix this issue. It works by a company raising an invoice to a customer and sending the lender a copy of this, after which the lender will then provide the company with funds secured against the invoice (up to 90% of its value) often within 24 hours of approval. The remaining percentage is paid to the lender after the collection of the payment has occurred. This facility is run on an undisclosed basis meaning that your customers are never aware of the lender involvement and you maintain control of your sales ledger and the collection process.
Finally there are Fuel cards, helping companies that rely on transportation such as those in haulage, fuel cards give you a wholesale discount on the fuel you require. They can also be useful for fraud prevention and seeing filling patterns. Many also offer points or rewards systems for card holders.
How can Touch Financial help?
Here at Touch Financial we offer all the services listed above along with many more. If you are interested in finance for your Haulage business please don’t hesitate to get in touch, you can call us on 0207 510 0033 or alternatively fill out our contact form and one of our team will be in touch.