Inside Waddle

Inside Waddle


January 2018
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Why transport SMEs are exiting invoice factoring for cloud funding

Slow payments, rising costs, taxes and hard to get working capital are classic operator pain points.

Team WaddleTeam Waddle


Cloud-enabled transport operators are a new breed, they get the value “the cloud” brings to bottom line profits.

Slow payments, rising costs, taxes and hard to get working capital are classic operator pain points.

The key challenges facing operators of transport or logistics companies topping the list are:

The #1 question here is, “why bother making a move from factoring?”.

Factoring providers have been a staple for decades and for decades it has been the status quo, putting up with higher rates, paperwork and hidden back end work load is just what you do.

Many operators in the transport & logistics sector already use invoice factoring to close down the cash gaps created by seasonal highs and lows, keeping money at hand to pay staff and suppliers.

Let’s breakdown what you’re doing right now

When you factor an invoice, you’re charged fees on the invoice face value. Each one of these invoices is based on a load, usually made up of:

Have you ever sat down and really (like really) done the numbers?

Factoring providers charge fees on each invoice, and some charge fees even if you don’t use the funding each month.

Consider this:

Ok, so let’s say you can break down the cost per invoice raised for the just the finance and you know your profits per job/load.

Now that you know this, what is it costing you to administer the factoring companies funding for them?

Once you take on factoring, you'll be paying for the hidden administration that wasn't in the glossy brochure or indicative offer you'll be sold on

SEE ALSO: Invoice Finance Rates: Traditional Lenders Profit From Your Confusion

If you’re not doing the work, you’ll be paying someone else to do it. Here’s why:

Factoring providers use third-party software designed and built either in the United States or Europe. These systems are built to work stand alone that you need to use.

This means:

That’s not even the best part yet:

In addition to the above, you’ll enjoy:

The reality is, most business owners stick their head in the sand when it comes to figuring out what factoring really costs them. It’s put in the “too hard” basket to be figured out by the accountant come end of year.

Bill shock is the classic response. “oh but it was only 2% per invoice + interest”, “how has this cost me this much?”, “why am I charged each month even though I am not factoring all my invoices?”.

Here’s why it’s not your fault

Factoring has been around since forever and a day. Your accountant or finance broker has been dealing with the same old providers. They won’t recommend anyone else because they usually golf with the sales guys and feel comfortable referring you time and time again.

“If it ain’t broke don’t fix it” is sometimes the attitude when it comes to financing offerings. Technology and lending options are rapidly changing and this mentality just doesn’t cut it anymore.

99% of the time you only focus on the costs and the amount of money you can get approved for without a fleeting thought to the impact on your operation.

You’re not alone – invoice factoring is a $70 Billion + industry and it’s a specialised commercial lending product recommended by advisors “in the know”.

If you’re currently in a factoring arrangement, you’re either thinking “nah I am happy with what I’ve got they give me money when I need it”, “I  can’t stand this anymore” or you’d prefer not to take a close look at how it’s impacting your profits because it’s working and you’d rather not know.

There’s other reasons why you haven’t looked around:

The bottom line here is, “What is it truly costing me not to change?”

SEE ALSO: 21 Hidden Invoice Factoring Costs You’ll Need to Know (RESEARCH)

Cloud invoice financing is the modern alternative

Invoice Finance has gone through a significant evolutionary change, here’s why.

With more businesses taking up cloud accounting and online invoicing software, innovative lenders like Waddle have developed financing products that can connect to your software online and automate the entire lending process.

Just like downloading a new app on your phone, you can simply connect Waddle to your accounts, obtain a finance offer and be up and running within a day, getting on-going access to new funding against your outstanding invoices.

Invoice Finance is not invoice factoring, here’s why:

With cloud accounting becoming very popular, online invoice financiers like Waddle have changed the landscape by removing any of the administration involved in qualifying and operating these facilities.

For the business owner this means no disruption to their operation and no audits. Once a business creates new invoices these are synced directly to their Waddle account instantly to be drawn-down against for working capital.

This means:

Transport business need to know that financing and hidden admin isn’t eroding their profit margins. Cloud-enabled operators can integrate every system from invoicing, con notes through to financing.

They can now view real-time invoicing and enjoy live access to immediate funding on any device.

Before you roll into another year with your factoring provider, check out what you could be saving.