As a haulage or freight business in the UK, are you annoyed with waiting multiple weeks and sometimes even months for your invoices to be paid? You are not by yourself. In this line of work, delayed payments are the norm, disrupting cash flow, stunting growth and increasing levels of stress. The best part? Freight factoring can provide a quick solution to get you in control of your finances once again. If you are looking to learn more about implementing freight factoring in your business, this guide will provide you with the information you need.

No matter what your level of knowledge is on invoice finance, we will take it step by step so that you know exactly how to convert your unpaid invoices into readily available cash, starting with ‘Simply Factoring Brokers’.

The Importance of Freight Factoring 

Understanding its significance is important for the survival of businesses in the UK transport industry.

Freight factoring is a form of invoice finance specifically designed for transport companies. Instead of waiting 30, 60, or even 90 days for your clients to clear their payments, you sell your outstanding invoices to a factoring company at a discount. Within 24 hours, they will pay you a significant portion of the invoice value. When your client eventually pays, the remainder is paid to you, less the agreed fee.

What is the relevance of this for UK hauliers?

• It covers cash flow gaps, allowing timely payment for drivers, fuel, and maintenance.
• It enables you to accept larger contracts.
• It reduces the administrative burden and stress associated with payment collection.

Expert Tip:

A large number of developing UK hauliers utilize factoring to expand their fleet because it’s faster than traditional bank loans.

Determining the Right Fit for Your Business and Freight Factoring

In business, there is no one size fits all. Take a moment to determine if freight factoring aligns with your operations.

Consider these questions:

• In the past, have you provided B2B invoicing solutions to businesses within the UK transport sector?
• Is 30 days or more considered to be the payment ceiling for invoice settlements?
• Is delayed payment affecting your ability to pay staff, suppliers, or invest in growth?
• Would you, hypothetically, like to spend more time running your business instead of attending to collection matters?

If you’ve responded in the affirmative towards the towards the target questions, then it’s safe to suggest that you are a prime candidate for freight factoring.

Illustration:

Sarah operates a mid-sized haulage enterprise situated in Manchester. Some of her key contracts went unpaid for almost 60 days. Post partnering with a freight invoicing factoring specialist, she was able to receive cash within 24 hours of invoicing which meant that she could confidently fuel her trucks for new jobs.

How to Instigate Freight Factoring in The UK: A Guide

Ending the struggle is quite straightforward. Here is how it is put together operationally:

Step 1: Locate An Appropriate Factoring Associated

Proving the right factoring company to work with should not be that difficult. Search for a provider who meets the following profile:

• Specialises in freight factoring. We recommend Simply Factoring Brokers.
• Has worked with UK-based haulage and logistics firms.
• Provide their clients with transparent agreements and have fast operational procedures.

Pro tip: A suitable broker will make comparisons and necessary arrangements for you which saves time and effort.

Step 2: Apply & Submit Your Unpaid Invoices

This is the straightforward step of the application. As standard, you are required to submit the following:

• Business Information (company registration, turnover, etc.)
• Recent list of unpaid freight invoices
• Basic financials or trading history

Good factoring companies will set the bar high, garnering fast approval of 48 hours.

Step 3: Get Paid Upfront

Your submitted invoices will reach a factoring provider and approved clients will receive 90% of the invoice (or greater) within a day. For business cash flow, the receipt of 4-figure sums within 24 hours is life changing.

Step 4: Your Client Pays the Factor

Facilitating funds is the only job your customer has when an invoice is raised as payment. They collect and preserve the invoice task, bringing savings to your administrative staff.

Step 5: Receive the Remainder minus the Fee

The remaining balance is sent to you after the set fee which is easily predictable, received funding your business can run smoothly without disruptions.

Best strategies to maximize the pros of Freight factoring

To reap the most benefits from freight factoring, consider the following tips:

• Select a Transparent Provider: Stay clear of complicated contracts and hidden fees.
• Keep in Touch with Your Customers: Update them on the factoring agreement to avoid any unforeseen payment issues.
• Control Credit Effectively: Good relationships with clients and timely payments will earn you favourable terms with the factoring company.
• Be Wise with Extra Cash: Purchase additional assets to expand your company, fleet, staff, or enhance marketing efforts.
• Review the Business Regularly: You might qualify for better terms as your business improves.

Expert Opinion:

There is a perception among many freight businesses in the UK that factoring is not just a means to bridge financing gaps; rather, it has evolved into a reliable form of sustaining growth in a challenging environment.

Getting Started Today: Forming a Partnership with Simply Factoring Brokers 

The time to put your plans into action is now that you are willing to maximize potential in your business and control cash flow. Simply Factoring Brokers made freight factoring easy and affordable for so many UK logistics companies that they now thrive effortlessly.

• No obligation tailored quotes: Get fast and friendly complimentary advice.
• Prompt decisions: Receiving cash during emergencies will be possible with fast approvals.
• Dedicated service: Take advantage of a team who knows everything about UK transport.

Closing Remarks

For eager UK haulage contractors, freight factoring is far more than a cash flow solution. In conjunction with the steps outlined, it allows you to leverage unpaid invoices as working capital, unlock new avenues, and develop a self-sustaining business.