Panic Link in a cashf low crisis
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by Rob Willock • Agents and franchisees of Panic Link are collapsing unpaid as the Leicestershire parcels carrier hits a cashflow crisis,
Commercial Motor has heard from a number of sources that the company is operating well below capacity and is not making monthly commission payments in full.
"D-day is Friday," says one. "The franchisees always get paid on the last Friday in the month—we'll see if they do."
At least seven franchisees and agents have gone to the wall in January, while one other has put Panic Link business on hold until it is paid. And several Panic Link sales managers are in talks with conciliation service ACAS over non-payment of wages.
Panic Link director Philip Kirk says that if franchisees have not been paid it is because they have been in breach of contract. "Where a franchisee stops trading it is in breach and may not be paid," he says. We reserve our right to offset our costs against the contracts."
Kirk says Panic Link is managing its cash "to the best of our ability", but does not deny that there is a crisis at the company.
Another source says: "No one gives Panic Link long. Its muchvaunted Eurohub 2000 is trading at about 10% of capacity."
Many are putting the company's problems down to overinvestment in the Lount hub, which was built to handle business secured at the end of 1994.
It was designed to deal with 14,700 packages an hour and was advertised as the world's most advanced automatic sortation system".
In 1996, the company reported pre-tax losses of £673,000. It made £1.35m in 1995.
Soon after, rival parcels firm Direct Express moved into Lount to boost capacity—the companies now work together.