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An alternative for materials handling financing

26 January 2016

Alex Macdonald, regional sales manager at Secure Trust Bank Commercial Finance, discusses how an alternative finance solution can help drive growth for materials handling businesses.

Slow turnaround on unpaid invoices from customers, coupled with pressure to cover fuel and machinery costs can leave firms with a hole in their finances. Materials handling businesses must be able to shape their practice around customers’ needs, which means being able to respond to demand quickly, without having to worry about where the money is coming from.

Due to the varying cash flow requirements of materials handling firms, traditional lenders are not always able to accommodate their needs. Even if businesses do approach these lenders, they may find themselves caught up in a lengthy process, with no guarantee of funding at the end of it. The alternative is an invoice finance facility, allowing firms to receive an advance on the cash they are due from customers, or an asset-based lending (ABL) facility, a cost-effective way to refinance physical assets. Each offers the benefit of freeing up working capital, allowing firms to make the investments they need to keep on top of the requests of their customers, be that through refinancing property, equipment or vehicles.

These facilities are predicated on flexibility, allowing businesses to focus on growth and plan for the future, whilst upholding their current commitments and not letting customers or their workers down. This requires a provider that is focused on working closely with the business. The fact that materials handling is the focus of so much innovation means that lenders are becoming increasingly attuned to the needs of the sector. They are therefore able to develop personalised responses and solutions that match its requirements.

Materials handling firms require a provider that will not stifle growth, but will rather provide a facility that is flexible and that has the capacity to grow in line with the firm. These facilities offer the benefits of local decision-making, and the necessary working capital to enable businesses to make investments and boost efficiency. Responsive to the peaks and troughs that businesses face, invoice finance could be the key to growth for forward-thinking materials handling firms.

CASE STUDY

Hannaman Materials Handling, a forklift truck and material handling equipment specialist, is on course to double its turnover by 2017 following funding support from Secure Trust Bank Commercial Finance. The invoice finance facility will be used to improve cash flow and assist with the expansion of the business. The firm now plans to expand across the North West, both organically and through a series of potential acquisitions.

 
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