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Sorry mate, the dog ate the cheque
Page 30
Page 31
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Sound familiar? CM's news team looks at how late payment is crippling the industry, 111111,'
Hauliers have hit out at late paying customers, accusing them of using transport firms as unofficial banks to fund their businesses.
The late payment culture is becoming endemic in British business. According to a recent survey from Experian, companies are taking,on average,five days longer to settle their bills than at the same time last year.
In fact, transport and distribution firms have some of the worst records of any sector for late payment. Unsurprisingly the larger the operator, the longer it takes to settle its bills — the average period is 80 days, almost three months.
Cashflow problems
These long payment periods can cause incalculable damage to small operators who are forced to live a hand-to-mouth existence — shelling out up-front for diesel and drivers' wages while having to wait for payment from customers, Steve Williams, from the Road Haulage Association's Eastern region, adds: "The biggest problem across the board is that fuel companies are tightening their payment terms, wanting most customers to settle within 30 days.
"It becomes a big cashflow issue. It's sad really,you used to get people telling you they wanted to come into the industry and saying they'd earn, say, £6,000 a month. You'd ask them what they'd do for the first three months and they'd just look at you with incomprehension.
"From the first week they are trying to catch up, and I don't think many ever do. I certainly don't know many at the smaller end who've got enough cash not to worry where the next cheque is corning from. It's not improved in the past 10 years either."
Steve Barclay, managing director at Barking-based Warton Freight Services, adds: "It's a huge problem. The government needs to legislate for a maximum of 30 days — this would mean a 100% improvement to our business, and also prevent so many transport firms going into receivership. "This is often due to a lack of funds, which they are owed by customers. Late payment means that we also end up paying huge bank charges and arrangement fees — effectively we fund other companies' supplies and so never manage to get in front."
This is a view echoed by Peter Bennett, managing director at Didcot firm Freight Shepherd. He comments: "You have to always keep on the ball. But we're in the same position as everybody else — customers always seem to have an excuse.
"You can try to put people on stop but that does tend to ruin the customer/supplier relationship. That said, hauliers are some of the worst payers — we are our own worst enemy in that respect."
Most operators say that the only way to avoid the pitfalls of late payment problems is good credit control keeping an eye on when payments are due and making sure persistent offenders are avoided.
Bad reputations
But Terry Swinson of Terry Swinson Transport in Uttoxeter. Staffs, argues: "We don't really have any problem with late payment. Our older clients are now on a 60 or 90-day payment system.There are companies I wouldn't work for, because they are renowned for having terrible rates and then not paying up when you do the work."