Beggar your neighbour
Page 11
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Earlier this year a prominent, and very successful, haulier declared that lack of cash-flow planning — having the ready money to pay the bills — was the most vulnerable area of haulage businesses. It was a warning that should not go unheeded now that business is booming for many operators. The coming of Value Added Tax has introduced a new factor into the dangerous game of invoicing early and paying late, and even in conditions which may resemble a seller's market, hauliers are not finding it easy to get prompt payment.
When preparing the article on pages 40-41 of this issue we asked a cross-section of hauliers how long they had to wait for customers to settle their bills. We are grateful for the degree of co-operation we received on such a delicate business matter — and the answers were very revealing. The average time taken to settle the hauliers' accounts is 10.3 weeks. One fortunate operator gets his main bill settled before the end of the month following the job, but several told us that they had to wait more than four months for settlement, with large customers the slowest payers. And it is not always the smallest hauliers that have to wait longest: one of the big groups is being obliged to give 70 days' credit, and reports that debts have become progressively more difficult to collect over the past 12 months.
Some operators may now be able to redress the balance a little by careful timing of payments and VAT cl-aims, but too many operators have for too long been exploited financially by customers who take advantage of the industry's fragmented and competitive nature. One cannot lay down hard and fast rules for credit terms, and a united national front by hauliers is too much to expect, but unless operators draw a line somewhere (and now is the time to do so) they could soon find the longest credit period becoming the norm. It would, perhaps, be salutary for slow-paying customers to find hauliers refusing their traffic.