Business finance for transport and logistics

Transport businesses carry the economy, and a lot of cost along the way. Trucks are expensive to buy and run, drivers and fuel are paid every week, and customers frequently pay on 30 to 60-day terms. A well-run transport business can still find itself paying out for weeks before the money comes back. Finance in this sector usually comes in two forms: asset finance for the vehicles, and working capital to bridge the payment gap.

The two big finance needs

Need	Typical solution
Buying or replacing vehicles	Truck finance and equipment finance
Paying drivers and fuel while waiting on customers	Invoice finance or a line of credit
Expansion into new contracts	A combination of both

What lenders look at

Lenders who understand transport ask about contracts and customers first. Long-term contracts with reliable customers make lenders more comfortable than spot work. They look at fleet utilisation, the age profile of vehicles, existing finance across the fleet and how the business has handled previous loans. For owner-drivers, industry experience and a letter of engagement carry significant weight.

They also look at concentration: a business with one dominant customer is exposed if that customer leaves or pays late.

Managing running costs

Fuel, tyres, maintenance, registration, insurance and compliance can swing sharply. Build these into every finance decision, and include a downtime allowance. A truck that is off the road for repairs earns nothing while its repayments continue. Compliance requirements are set by the National Heavy Vehicle Regulator, and maintaining records helps both safety and lender confidence.

Common traps

1. Balloons larger than resale value. Hard-working trucks lose value quickly.
2. Taking on contracts without the cash to service them. New contracts often mean weeks of costs before the first payment.
3. Fragmented fleet finance. Many small facilities with different lenders are harder to manage and review.
4. Ignoring fuel clauses. Contracts without fuel adjustment can turn profitable runs into losses when prices rise.

An illustrative example

A made-up regional carrier wins a contract that needs two more trucks and a trailer. It finances the vehicles with chattel mortgages and sets up invoice finance on the new customer’s invoices, which are paid 45 days after month-end. The invoice facility covers fuel and wages until payments start flowing, and the carrier’s existing line of credit stays free for breakdowns and surprises.

Strengthening a transport application

Transport lenders like detail. List your vehicles with age, kilometres and existing finance. Provide copies or summaries of contracts showing term, rates and any fuel adjustment clauses. Show customer concentration honestly and explain how you would cope if the biggest account reduced work. Bank statements should show steady deposits from customers and consistent payment of fuel and tolls.

If you are a new owner-driver, a written engagement from the company you will drive for, plus evidence of your driving history and licences, can make the difference between a decline and an approval.

Questions to ask before you borrow

• Does the contract revenue cover repayments, fuel, maintenance and a downtime allowance in a slow month?
• Is the balloon below the truck’s likely value at the end of the term?
• Can the facility be paid out early if a contract ends or you upgrade?
• How will invoice finance handle disputed or late-paid invoices?

Finance for your transport business

If you are adding vehicles, replacing a fleet or waiting on slow-paying customers, finance matched to the job can keep wheels turning. To explore options, make one enquiry. There is no credit check when you first enquire, a real person reviews it and your details go to one lending partner rather than a crowd. Tell us the vehicles you need, your contracts and how customers pay in your enquiry.