South Africa has the most advanced transport networks on the continent with freight and transport demand increasing daily. This bodes well for transport entrepreneurs—but, running costs quickly erode cash-flow, the lifeblood of any business.
As a business owner, you may think you need to take a loan to survive, but this counterintuitive. You don’t have to go into debt just to keep the wheels turning! Your debtor’s book holds the key.
Here’s how you can secure positive cash flow and the working capital, your transport and logistics company needs.
Factors That Impact Cash Flow in a Transport and Logistics Business
While a transport and logistics company has much growth and profit potential, operating one is no easy feat. You face a great deal more risk than other businesses.
Almost all of your operating expenses have to be paid upfront. Tyres need replacing; drivers need their salaries. Fuel and tolls increase. You can’t fill your truck with Diesel on credit. Yet, customers can take up to 30 days’ to pay. In fact, in the current economic climate, clients are placing more pressure on transporters to allow for 60 to 90 days payment terms.
In the beginning, some business owners will try to cover the shortfall themselves. This is unsustainable as the cash-flow gap widens. Before you know it, you’re driving yourself into debt for the sake of injecting cash into your business.
There’s a much easier solution. Get paid faster, Debtor Finance.
You don’t have to cripple your competitiveness by taking away credit terms from your clients. You don’t have to take a loan to get a lump sum of cash. You don’t even have to take out an overdraft to keep your business afloat!
Sound too simple? It’s not. Your debtor’s book is an asset, one that you can leverage to secure the cash that your business has already earned sooner.
Your debtors book accounts receivable acts as collateral for short-term funding. You receive cash upfront to the value of your outstanding invoices, minus a small management fee.
It gets better. There are more business benefits than just getting the working capital you need, when you need it.
- Provides the security to extend longer payment periods to customers
- Mitigates risks from slow paying customers
- Improves management accounts provides better negotiating power with creditors
There are two forms of debtor finance, invoice discounting and invoice factoring.
Transaction Capital Business Solutions’ Unique Debtor Finance Solution
After more than 60 years providing finance to South African business across all sectors, we’ve come to learn what business owners need and value.
That’s why we have developed a unique debtor finance solution that combines the best of invoice discounting and factoring.
- Minimal fees for financing
- Up to 75% of the value of your outstanding invoices paid upfront
- Your business issues invoices to your customers while we manage collection from customers. Saving time and freeing up in-house resources.
- You receive the remaining balance on your invoices (minus our nominal fee) when we have collected payment in full.
We are a JSE listed company with expertise in risk management, compliance and governance. We are dedicated to assisting business growth through sustainable finance solutions, and we readily offer insight and guidance. All our business dealings are guided by our strong code of ethics and transparency.
If you would like to know more about debtor finance from Transaction Capital Business Solutions, talk to us. We look forward to meeting you.