'Why do most hauliers rarely bother to credit check their customers?'
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Hy is it that people who are normally sensible take such needless risks when it comes to money? I'm not talking about becoming a Lloyds name, but the sort of decisions that transport managers take everyday when they accept a load, and thereby grant a customer credit.
Let's face it, if you or I as individuals want to buy something on credit, the first thing that happens is that our credit worthiness is checked.
Why then, when all the facilities are readily available to everyone in the road haulage industry, do most hauliers rarely bother to credit check prospective customers?
There can be few things guaranteed to make people more annoyed than becoming the victim of some "tin pot" company which has gone bust after five or six months.
But it's not until the sorry mess is exposed at a creditors' meeting, that the extent of the damage is revealed. Thousands of pounds can be owed to beleaguered hauliers who carried out the work in good, but totally blind, faith. Unfortunately the money is unlikely to be seer again. If only companies would make a simple credit check first, not only would a lot of grief be avoided, but many "cowboy" outfits would go out of business because they would find it almost impossible to trade.
When I hear calls from the industry for faster payment terms and "someone" to do something about companies who go bust owing thousands of pounds, I ask myself: "Why don't these people do more about it themselves?"
Question: If your business is achieving a 5% net profit margin and you incur a bad debt of £1,000, what is the real damage to you? Answer: For the next £20,000 worth of sales you will not make ANY profit while you recoup your bad debt. But there is help. Credit Information is available to every haulier. Companies such as Dun and Bradstreet, the Infocheck Group and CCN, specialise in providing credit information on businesses throughout Europe. And the good news is it's not expensive. You might invest £75,000 on a new vehicle. You probably do spend thousands of pounds on fuel and insurance each year. Yet how many hauliers bother to set aside just a few pounds to help protect this massive investment? Sadly very few. The idea of spending £20 to check out a prospective customer seems to come under the heading of an "unnecessary extra cost" for most companies. If you regard checking as "unnecessary" then good luck to you. But just remember that "unnecessary" cost next time you have to attend a creditors' meeting.