What is Logistics Finance?
Logistics and supply chain finance support businesses in the logistics sector to spread running costs and bridge gaps in cash flow. This essential sector involves significant outlay: vehicles and equipment, staff costs and warehousing, digital solutions and technological upgrades can all place your budget under stress. That’s even before external factors such as driver shortages, fluctuating fuel prices and the complications caused by Brexit.
How does Logistics FinanceWork?
Here’s a quick overview:
There are several options for financing your logistics business.
Business loans:
Secured loans require you to offer an asset as collateral, typically in return for a higher borrowing limit and lower interest. If you do not repay the loan, the lender can seize the asset. Unsecured loans, without collateral, may require a personal guarantee.
Asset finance:
Hire purchase and lease arrangements allow you to buy or rent vehicles and other logistics equipment without significant upfront costs. Payment plans are monthly and include fixed interest and VAT.
Refinancing:
If you already own expensive assets, you can release some of the equity by selling them to a lender and leasing them back again.
Invoice finance:
Rather than wait for clients to pay, you can assign outstanding invoices to a lender and receive an immediate advance of 70% to 90%. The remainder, minus the lender’s fee, is released to you when the client settles the invoice.
How can I use financing for my logistics business?
If you’re looking to fund a new or second-hand trailer, you have three major options.
You can use financing for any aspect of setting up, running or growing your logistics business, including:
Buying or renting premises
Hiring, training and paying drivers and staff
Fuel costs and utilities
Buying, leasing and maintaining vehicles
Managing gaps in cash flow
Upgrading or replacing vehicles and equipment
Renewable energy and digital technologies
Road tax and congestion charges
Logistics businesses of any size are eligible for finance: from independent local courier firms to large-scale fleet management operations. Because of the seasonal nature of demand, specialist lenders offer solutions such as flexible invoice financing and spot factoring, where you choose which invoices to assign. This helps spread cash flow more evenly throughout the financial year.
To apply for funding, you’ll need to undergo credit and security checks and submit evidence of your business’s finances. This usually includes accounts and income statements covering a set period, a cash flow forecast and balance sheet, and often a business plan. Some financing offers are only available to established businesses with a certain monthly turnover, while others are designed for newer businesses and startups.
How does logistics and supply chain financing deal with cross-border operations?
The nature of the logistics sector means that cross-border transactions are a normal part of everyday business. Specialist lenders know the sector and offer tailored solutions that take the challenges of post-Brexit logistics into account. For example, many lenders allow you to assign invoices from both domestic and EU clients. This means you don’t have to rely only on your UK contracts to release that much-needed cash injection.
Speak to a Logistics Finance Adviser
Secure flexible funding to support vehicles, fleet expansion, equipment and working capital.
Whether you're managing transport contracts, scaling operations or upgrading infrastructure, structured logistics finance helps keep your business moving while protecting cash flow.