This morning the RAC confirmed that the average price of diesel on UK forecourts has reached 200.01p a litre. It is the first time the national average has gone above £2, and it is not a one day blip. Diesel is up by roughly 35% since February. The RAC attributes the rise to conflict in the Middle East and the disruption it has caused to shipping through the Strait of Hormuz.
For a car, that means £110.01 to fill a 55 litre tank, about £31.70 more than at the end of February. For a business that runs vehicles, plant, or a supply chain that depends on either, the number is far larger, and it arrives every week without being invoiced for.
This is not really a piece about fuel prices. It is a piece about what rising fuel costs do to the gap between money going out and money coming in, and what can realistically be done about that gap.
Fuel is paid for today. The invoice that covers it is paid in sixty days. That gap is the whole problem.
Haulage and logistics, where the numbers are public
Fuel is around a third of a haulier’s operating costs, which makes this the single most exposed sector in the country. Industry estimates put the current increase at roughly £300 a week per truck. Run ten trucks and that is £3,000 a week, or around £12,000 a month, leaving the business before anybody has paid for the loads that burned it.
The Road Haulage Association puts typical haulage margins at about 2%. There is no version of a 2% margin that quietly absorbs a third of its cost base rising by a third. And passing it on is far harder than it sounds: in the RHA’s own survey, only one operator in ten said they could recover the full increase from their customers. Rate cards were agreed months ago. Fuel surcharge clauses, where they exist at all, usually move on a lag.
Richard Smith, the RHA’s Managing Director, has described it as “a here-and-now issue that demands substantial government intervention”. The RHA is calling for an Essential User Rebate ahead of this month’s Budget. Whether that happens is a matter for government, and no operator can plan on it.
Construction, with no rebate to fall back on
Construction lost its entitlement to rebated red diesel on 1 April 2022. Agriculture, rail vehicles and non commercial heating kept it. Excavators, dumpers, telehandlers, generators and site vehicles did not. Every litre burned on a site today is bought at the full duty price, so the sector feels a forecourt increase at full strength and has done for more than four years.
Then the increase arrives a second time, in the price of everything delivered to site. Aggregates, concrete, steel, plant hire and skips all carry fuel in their pricing, and all of them are repricing now.
Against that, construction has the longest payment terms in the economy. Work is valued, applied for, certified, then paid, and a slice is held back as retention on top. The diesel went into the ground in week one. The money for it turns up a long time later. The sector recorded 3,827 insolvencies in England and Wales in the year to March 2026, around 16% of all business failures, and timing is the mechanism behind a great many of them.
Manufacturing, where it arrives twice
Manufacturers tend to treat this as somebody else’s problem until the quotes come in. Fuel reaches a factory from both directions, inbound freight on raw materials and outbound delivery of finished goods, and directly again wherever there are forklifts or a delivery fleet.
The difficulty is contractual rather than operational. Supplier prices move within weeks. Customer price lists were often agreed for the year, and the customer pays on 30 to 60 day terms. So the cost of making the thing rises in October while the money for making it arrives in December, at a price set last January.
What rising fuel costs do to all three
Strip out the detail and the pattern is identical across haulage, construction, manufacturing and every delivery, coach and plant hire business sitting alongside them.
- The cost moves immediately, and it moves in full.
- The price you charge moves slowly, if it moves at all, because it is set by contracts and rate cards agreed before any of this happened.
- The money that covers the cost arrives 30, 60 or 90 days after the work is done.
That is a timing problem before it is a profitability problem. It matters because the two look identical from the inside and need completely different answers. Businesses run short of cash in a month like this one not because they are trading badly, but because the cost of doing the work moved before the payment for it did.
What actually helps
Four things are worth doing, in this order.
Reprice, and put a fuel mechanism in writing. This is the first and best answer and nothing below replaces it. If only one operator in ten is recovering the increase in full, the other nine have a commercial conversation to have, and a surcharge clause in the contract beats asking for goodwill later.
Attack the consumption itself. Fuel cards, bunkering, idling, routing, driver behaviour and tyre pressures all make a real difference. Incremental rather than transformative, but it is money you keep.
Be careful about taking on more debt. A loan or a flexible credit facility will bridge the gap, and for some businesses it is the right tool. But it is repaid in instalments out of trading cash whether or not your customers have paid you, so using one to cover a late payment creates a second obligation sitting alongside the first.
Release money you have already earned. If the work is done and the invoice is raised, the money exists. It is sitting in somebody else’s accounts payable queue. UK SMEs are owed around £70.4bn in unpaid invoices at any one time.
Releasing money you have already earned
This is where invoice finance comes in, and it is worth explaining plainly because most businesses have never heard of it. Around 58% of SMEs have never looked at any form of finance beyond their main bank, and of roughly 5.7 million UK businesses, only about 55,000 use invoice finance at all. That is close to 1%.
Selective invoice finance works one invoice at a time. You choose an invoice. We advance up to 80% of its approved value, and those funds are released immediately once the invoice is approved. The remaining 20% is not ours and we do not keep it: it comes back to you when your customer settles, less our fees. Because it clears itself when the invoice is paid, it is not a loan and there is nothing to repay out of next month’s trading.
There is no long term contract, no obligation to put your whole sales ledger in, and nothing to pay in a month when you do not use it. Approval rests mainly on your customer’s creditworthiness rather than your own balance sheet, which matters in a year when every set of accounts in these sectors looks worse than it did. Enquiring is a soft search with no footprint, so it does not affect your credit rating. Facilities run from £25,000 to £250,000, and how the process works is deliberately short: for a business starting from nothing, first contact through to funds in the account can take as little as 48 hours.
Whether your customer is told is decided case by case, and you are told which we are proposing before anything is signed. On a confidential facility we do not approach your customer at all, not even to verify the invoice, which we verify from your own paperwork instead, and there is no extra charge for it.
Where this is the wrong answer
It would be easy to present invoice finance as the answer to a fuel crisis. It is not.
- It does not fix a pricing problem. If a job or a route is loss making at 200p diesel, funding the gap only funds the loss for longer. Reprice first, then deal with the timing.
- It needs business customers on credit terms. If you sell for cash, sell to consumers, or get paid on the day, there is no invoice to advance against.
- It is not a surcharge clause. It brings forward money you are already owed. It cannot recover money you never charged for.
- It costs money. It earns its keep when the alternative is turning down work, paying suppliers late or missing a payroll. It is not a sensible way to fund ordinary running costs indefinitely.
- The invoice has to be owed by a business in England or Wales. We do not buy overseas debt, and for legal reasons Scotland falls into that category too.
If this is the month it has started to bite
Nobody in haulage, construction or manufacturing needed another cost this autumn, and nothing makes 200p diesel cost less. What there is, is a choice about whether the money you have already earned sits in somebody else’s bank account for another two months while you fund their payment terms out of your own working capital.
If you have an invoice raised and approved and a fuel bill that will not wait, it is worth a conversation. We will tell you if it is not the right answer for you.
Get a Same-Day Assessment · t: 020 3617 2021 · m: 07766 835432 · hello@selectinvoicefinance.com
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