4 Methods to Help Finance Your Business’ Fleet

Methods to Help Finance
Managing a fleet is no easy task. You run into a cluster of issues but the first of which would be financing it. Here is some help to get you financed so you can upkeep your business’ fleet.

Whether a business rents out cars to customers or is a commercial long range hauler, slow payment on receivables does not have to cripple a business and leave your fleet stranded without funds to maintain. The right financial strategy will allow a business to take on more customers and keep their fleet available during the busy season. Every service incurs a fee, and they can add up extremely quick. Judicious choosing will yield the best deal for your business and following some simple advice can do wonders for your business’ fleet.

Taking Out a Loan as An Alternative to Receiving Payment

A business that does not want to sell out their accounts receivable can take out a business loan to cover the costs of doing business during the wait period. Many entrepreneurs have business lines of credit with large limits and while this is a useful tool for unforeseen expenses, it does not eliminate the risk that customers might not pay. Interest adds up if the cash comes in slowly so making sure that you pay off this type of commitment quick is the obvious route to go.

Using Secure Credit to Pay for Expenses

A truck lot renting out a few dozen vehicles as a part of a franchise might use regular credit cards to cover small short term expenses. This is a fast solution, but like all fast credit it is a high risk maneuver. Business credit cards have lower interest rates and are often backed by securities. They contain safeguards in case a business falls on the rocks and can be a safer way to help finance you fleet in the short term.

Selling Stock to Disperse Risk

Both large and small corporations sell stock to raise the capital necessary to fund a fleet. Corporations will sell more stock whenever they face a sudden serge in business. This reflects their need for more capital and the possibility of slowing down without it. Stock causes other people to assume financial risk, but stock allows investors to collect dividends indefinitely. Smaller businesses in particular might wish to avoid this type of promise.

Using Factor Companies to Collect Bills for You

A factor is an entity that will purchase accounts that are receivable in exchange for cash up front. The business obtains funds immediately but forfeits the right to collect all sold accounts. Fleet factoring is gaining popularity as a way of handling financial risk, although it effectively amounts to inverted debt collection. Factor companies are experts at collecting debts, and their fee is effectively 5 to 15 percent of the total value.

Managing a fleet can be a real nightmare if you are unfamiliar with the options that you have to help you during slow times. If you are trying to manage a fleet in a hub like Salt Lake City, it makes sense to use financial services to manage a database of accounts as well as to obtain funding upfront.

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