To successfully operate a truck or fleet washing company an owner (or business manager) needs to be good at juggling multiple tasks and demands. They must be able to meet client demands, ensure that you have proper staffing and equipment and lastly, you must be able to manage your cash flow to ensure that you can meet your obligations. This last point – managing cash flow – can be one of the most difficult ones for new and growing fleet washing companies.
Like most commercial sales transactions, fleet washing companies need to give their customers net 30 to net 60 days to pay their invoices. But few small companies can afford to wait that long to get paid. They have to pay employees, buy and maintain equipment and cover a number of expenses to keep the company going. Waiting for 60 days to get paid can seem like an eternity when you have bills to pay. One approach that business owners take to solve this problem is to try and get quick payments from customers – usually by offering incentive discounts. Another approach is to delay supplier payments – at least until a key payment comes in. While these approaches can work – they can only go so far. For many, the better solution is to use a business financing tool, such as invoice factoring.
Invoice factoring can help reduce the cash flow problems of a fleet washing company. It provides the funds your company needs to pay employees, meet your obligations and target new business opportunities. Factoring accelerates your cash flow by using an intermediary finance company that provides an advance for your invoices from slow paying (but credit worthy) commercial customers. The factoring advance gives you the funds you need to meet your expenses while the factoring company holds the invoice until final payment.
One advantage of working with a factoring company is that factoring is easier to obtain than a conventional business loan. The most important requirement is that your fleet washing company must work with clients that have good commercial credit. Also, your company must be free of legal and tax problems. This makes it an ideal solution for companies in the fleet washing business. And, remember that for many factoring companies, a small or medium sized fleet washing company with few assets but a very strong customer list is an ideal client.
