Hauliers too slow
Page 7
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IAULIERS are too slow in recovering iebts from their customers, and could Inprove their cash flow greatly if they .dopt a more forceful attitude. So says an adependent analysis of 99 of Britain's eading hauliers, published this week.
ICC Business Ratios looked at 23 indeiendent and 76 subsidiary companies ietween 1976 and 1978, and expresses urprise at operators' laxity over bad lebts.
"Hauliers seem to have a tradition of iot pressing customers for payment, just is manufacturers are loathe to settle a ransport account," it says.
The industry's average collection )eriod for debts is 75 days, and 12 of the !,ompanies averaged over 100 days. But )utgoing expenses like fuel, drivers' Arages and maintenance occur weekly, lence ICC's surprise at the industry's attitude.
It adds: "Many companies could isefully adopt a more forceful attitude to :he collection of monies owed. The effects of rapid debt collection on overiraft interest and cash flow seem largely to be ignored by the haulier."
The report singles out Hercock Simpson (Holdings) Ltd as an example of an efficient business which is backed up by a 49-day collection period for debtors. It achieved sales per employee of £102,967. The report is based on the industry's circumstances before the 1979 drivers' strike, and ICC warns that many hauliers' balance sheets will have been lacerated.
It warns, too, that haulage will have to cut its coat to fit the conditions of the coming recession, and that the industry will have to concentrate on the basics of business management.
But, it adds, with an acid touch, "Competent management in the transport industry is, itself, a scarce commodity."
The report confirms many operators complaints about inadequate financial returns, and the average return on total assets for the three-year period rose only from 1977/78's 5.1 per cent to 7.9 per cent.
Independent companies tend to outperform subsidiaries, perhaps because they have to stand or fall by their own ability, and their average return on capital in 1978 was 24.6 per cent compared with 13.2 per cent by subsidiaries.
It goes on to point out that size is not necessarily an advantage in haulage. The fixed costs of National Carriers and Midlands BRS resulted in pre-tax profit to sales ratios of 1.7 per cent and a 8.4 per cent respectively. The report on road hauliers is available for £80 from ICC Business Ratios at 81 City Road, London EC 1Y 1BD.