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FUEL CREDIT
Page 42
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Fuel card companies have been hit hard by credit insurance restrictions
A lack of bank liquidity has certainly
squeezed the road transport industry, but earlier this year, it was the credit insurers who underwrite the fuel card firms that had the killer grip
Jakes De Kock, marketing director at The Fuelcard Company, owned by FleetCor, says the situation has grown worse as time has gone on. "Credit insurance restriction still has a major impact on the fuel card companies and our fleet users," he says. "Even our very largest users, who have traded with us for years, have seen their insurance pulled."
The Fuelcard Company has asked some firms to post bonds essentially their monthly expenditure for each month in a secured account to guarantee payment, but De Kock says this is putting an untenable strain on cash flow for some.
"For some of our clients, who we know to be really good companies, we've continued to work on the basis of uninsured risk."
De Kock says up to 10% of his company's customers have been affected by credit
insurance restriction, not including those businesses that have failed, but that number is heavily skewed toward haulage and construction companies.
"The problem is that our margins are small and our turnover huge so 10% of firms uninsured is a huge exposure for us."
There is little companies can do to allay the fears of the credit insurers, says De Kock, although it's very important to file accounts on time. "Any late filing, even if there is a good reason, can be seen as a fiag Any information companies can provide about management accounts or secured orders can help us assess whether we can continue to trade with them uninsured.
"Many companies do not want to share management accounts, but if they give us as much information as
possible, then we can feel confident [that the risk of non-payment is minimal]."
De Kock expects the situation to continue getting worse until the UK follows France and Germany out of recession. "Credit insurers are businesses, too, and they will need to start insuring firms again, but it will be those who are stable and trading well. I don't think we'll get back to where we were two years ago."
Jack Semple, director of policy at the Road Haulage Association, is concerned that the credit insurers will be watching the wave of accounts to be filed in the autumn very closely, "The credit insurance situation may well tighten again as annual results come out, which could spark afresh wave of failures," he says, noting operators are already under pressure from rising diesel costs and the recent 2p fuel duty increase,