Using Unsecured Business Finance to Get to the Next Level 

using unsecured business finance to get to the next level

It has been a bit of a rollercoaster ride for owner-drivers and haulage companies in every state and territory during the pandemic, but there is a way to grow during the crisis, using unsecured business finance to get to the next level. 

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Since the Covid-19: pandemic hit Australian shores back in March, there have been unprecedented disruptions to transport routes and traditional commerce. However, with more people shopping from home, 2020 presents some couriers and logistics companies with a massive opportunity for growth. Luckily, there are options for unsecured business loans if you want to take advantage of the opportunity to clock up more kilometres on the road. 

Using unsecured business finance to buy trucks, improve cash flow, or take on staff.

Having more goods going through your yard is one thing, but finding the funds to accomplish growth can be prohibitive. Often, committing financially to taking on extra staff can put a considerable strain on a business, and covering that cost until payments get made can be tough.

There’s no doubt that the pandemic has seen a boom in online shopping. The Australian market grew 15.5 per cent in the five years up to 2020, which equates to a few per cent annually. However, during a year defined by the response to COVID-19, it’s expected to rise by an astonishing 11 per cent. 

All those extra goods need to be delivered, and that’s excellent news for the transport industry. You might say it’s like Christmas every day, in fact – some courier companies are reporting a 20 per cent increase on regular delivery days when compared to 2019 figures for the festive period. However, growing any transport business means one or both of buying vehicles and equipment or taking on staff. 

  • Cash flow lending allows you to borrow on the strength of your projected cash flow. You don’t need a tangible asset as collateral – meaning it opens up options to fund more than just vehicles or rolling stock. You can use cash flow lending for additional equipment, taking on staff, or to cover day-to-day running costs.
  • You can use Unsecured business loans to buy trucks, equipment, or vans. Repayment terms are flexible, ranging from just six months to five years – and in some cases, longer. Again, because you don’t need to specify security for this type of finance, it’s excellent for covering a range of expenses. Many owner-drivers and small businesses use a single unsecured business loan to cover several of the different costs associated with expansion.

Unsecured business loans for couriers and supply chain operators

It’s hardly surprising – while the pandemic has produced growth in some sectors, it hasn’t all been plain sailing. Many of the businesses affected worst by the pandemic have had to pause operations for lengthy periods. Of those that will survive, getting back up to speed in terms of cash flow is going to take time. This time last year, the problem was bad enough for small businesses, with $7 billion worth of outstanding invoices putting a serious pinch on cash flow. 

Retailers have been doing it hard recently. It’s likely a number of the supply chain operators who service them are experiencing even more of a slow-down in payments during the pandemic. Chasing up late payers is frustrating at the best of times – especially if you’re an owner-driver or smaller business. It can be even more infuriating when that stops you from taking on extra work. 

Combatting cash flow congestion with invoice financing

Invoice financing is a way to borrow against the value of your outstanding invoices and maintain cash flow and using unsecured business finance to get to the next level. It’s a relatively cheap way to gain early access to the value of your sales because lenders view it as low-risk. Essentially, the invoice itself provides security against your borrowing – so you don’t need collateral. This is tailored-term finance, and there’s no need to borrow for longer than you need. The loan ends as soon as any invoices borrowed against get paid.

The Australian Small Business and Family Enterprise Ombudsman conducted a study in 2017 that indicated only 12 per cent of companies with less than four employees used invoice financing. It seems that many Australian owner-drivers and smaller transport companies still overlook this form of lending. 

That’s surprising, because invoice financing has many advantages:   

  • Automatically limit your borrowing term to the time it takes for an invoice to get paid  
  • The costs involved are similar to that of an overdraft
  • Gain access to revenue as soon as you deliver a load – not when the invoice gets paid
  • Stop cash flow problems associated with late payments – meaning slow payers don’t also slow down your growth when business is good. 

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