The easiest way to meet the financial requirements for an operator's licence using a factoring agreement

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The easiest way to meet the financial requirements for an operator's licence using a factoring agreement

Post by Admin »

Applicants or licence holders have to maintain a level of "financial standing" to apply for or maintain the conditions of their operators licence. For the first vehicle it's £8,000 plus £4,500 for each additional. More details can be viewed here.

If you don't have enough cash on your account at the time of application or later when you already have your operator's licence, the easiest way to meet the requirement that is by using an agreement with a factoring company. This method can also help you avoid the situation when you start operating your business and the debt ('accounts payable' in accounting terms) from your clients starts to accumulate because of their long payment terms but the amount of cash on the account decreases which technically will make you fail to maintain the financial requirement. You don't have to actually use the factoring service but as long as you have a signed agreement with a factoring company, that by itself is enough to meet the financial requirement for your operator's licence.

Even if you have the required amount on your account, that money is pretty much untouchable, it just has to sit there all the time like a dead weight and you can't use it for maintenance or anything else. If that's all you have and in order to use it, you need something like a factoring agreement cover the legal requirement on paper, then you can actually use that cash for something useful.

You can find factoring companies on Google by searching for phrases like below and similar:
truck factoring
hgv factoring company
invoice factoring
factoring company

Factoring companies will easily sign agreements even with new companies and give you a limit of £50,000 or more because it's much safer for them than for a bank to give you a loan or a line of credit. It's safe for them because they will only eventually have to give you cash in exchange for invoices for completed work which your client will have to pay them. They may evaluate each individual invoice or client later, at the time when you present them, but that's irrelevant for the purposes of meeting your financial standing requirements.

You can read this Wikipedia article to better understand how invoice factoring works in general but the point of this post is to let you know that simply by signing an agreement with a factoring company (but not necessarily using it) you can meet the requirement of financial standing for your operator's licence.

Another important point is that factoring companies are not regulated or licensed by anyone. So if you sign a factoring agreement with any company whatsoever, technically that should be enough to meet the financial standing requirements for an operator's licence.

There's always a level of discretion in granting of operator's licenses or accepting evidence of financial standing. You will probably still need to have at least some cash. A factoring agreement alone and nothing else may not be accepted but this can help you when you don't have enough from other sources.

If you need a Transport Manager (CPC Holder) or assistance with an Operator's Licence anywhere in the UK, contact Dmitry Nade at TransportForum.com 7 days a week 8am-11pm on 07833 684449 (phone and WhatsApp) or email: [email protected]

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Re: The easiest way to meet the financial requirements for an operator's licence using a factoring agreement

Post by Admin »

You CAN use a factoring agreement for a new licence application or to maintain the financial requirement once you have your O-licence. Just sign an agreement with a factoring company and submit it as proof with your application. You don't have to use it unless you choose to do so later or never. You'll still need some cash on your account but less than otherwise. There's a good chance they will accept £4,000 + factoring agreement rather than £8,000 required otherwise for 1 vehicle. Don't use factoring if you don't want to, you just need a signed agreement, that's all.

If you need a Transport Manager (CPC Holder) or assistance with an Operator's Licence anywhere in the UK, contact Dmitry Nade at TransportForum.com 7 days a week 8am-11pm on 07833 684449 (phone and WhatsApp) or email: [email protected]

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Re: The easiest way to meet the financial requirements for an operator's licence using a factoring agreement

Post by JJ4 »

Admin wrote: Fri Jul 30, 2021 3:21 pm You CAN use a factoring agreement for a new licence application or to maintain the financial requirement once you have your O-licence. Just sign an agreement with a factoring company and submit it as proof with your application. You don't have to use it unless you choose to do so later or never. You'll still need some cash on your account but less than otherwise. There's a good chance they will accept £4,000 + factoring agreement rather than £8,000 required otherwise for 1 vehicle. Don't use factoring if you don't want to, you just need a signed agreement, that's all.
Can you shed more light on invoice factoring agreements e.g like specific companies that you know do it and the costs associated with the agreement, Thanks
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Re: The easiest way to meet the financial requirements for an operator's licence using a factoring agreement

Post by Admin »

Google the following searches:
haulage factoring
transport factoring
hgv factoring
invoice factoring

...and so on...

Then contact those companies and discuss their terms, conditions, prices.

If you need a Transport Manager (CPC Holder) or assistance with an Operator's Licence anywhere in the UK, contact Dmitry Nade at TransportForum.com 7 days a week 8am-11pm on 07833 684449 (phone and WhatsApp) or email: [email protected]

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