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CREDIT CONTROL :
A PROBLEM FOR THE TRANSPORT INDUSTRY
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This amounts to an average of £39,000 being owed to each and every operator, although of course individual cases will be much worse.
To place this into context with other businesses, a total of £24 billion is due to all SME businesses for late payment meaning that haulage firms make up one third of the total.
What is it about haulage firms that makes prompt payment of their invoices so difficult ?
First of all, nearly all work done by haulage companies will be invoiced after the work has been done. In many other business sectors, payment is made either in advance or at the point of performance of the service. The typical haulage job will be invoiced on payment terms from 30 to 60 days or more.
Secondly, there is certainly a problem of an imbalance of negotiating power in the haulage sector at the moment. There are, in short, too many hauliers chasing too little work. This gives those engaging hauliers more power to drive down rates, pay more slowly and generally give hauliers a rough time safe in the knowledge that there are plenty of other companies around desperate for the work.
This is very much a symptom of the recession where economic activity generally has fallen off. The haulage industry is particularly (almost uniquely) sensitive to national economic performance because of the nature of the work it does.
Another factor is the number of businesses still on the brink of insolvency. Sometimes hauliers are reluctant to take legal action against any company owing them money due to the risk that their demand might push the company over the edge leaving the haulier with nothing.
Haulage operators need to tread carefully in these difficult times. However, there are a few steps which could be taken to minimise late payments.
Wherever it is possible try to get your customers to arrange automated direct payments to your bank on the day the invoice becomes payable. When late payments do occur, don’t ignore them. Call your customers and keep going back to them until the payment is made. Don’t let things get out of hand for too long before taking action. If your customers are not paying you at all and arrears are becoming high then take legal advice and consider legal action.
An Article Produced in September 2011
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