- 24 Apr
Factoring For Road Transport Company Cash Flow Problems As Bad Debts Increase
Coincidently, just after posting my article about transportation factoring companies, I saw an article published online by the Motor Transport publication, suggesting that bad debts have risen significantly within the road transport sector.
Factoring For Road Transport Companies
The article sites figures regarding the road transport sector, released by Credit Safe. This statistics show that in the first quarter of 2018, while sales have increased, quarter on quarter, by 1.3%, retained profits slid by 11%.
Bad debts within the sector have apparently jumped, as the money owed to road transport companies has increased by a huge 337%, again quarter on quarter.
This is undoubtedly going to place further pressure on the sector, on top of increasing fuel costs, staff costs and fears over the impact of Brexit.
There are significant cash flow pressures created by bad debts. These will be services that have been provided and are then not paid for. Even the increase in money owed will place pressures on any company experiencing such a huge slow down in customer payments. The longer the customers take to pay, the longer it is until you can use that cash to pay suppliers, staff etc.
These problems are exactly the sort of issues that can be alleviated by using a factoring service. Firstly, prepayments against outstanding invoices, including those invoices which are currently outstanding on your sales ledger, can release that cash that is currently locked up. Typically a factor will release 85% of invoice values (with the balance paid when the customer pays - unless you choose a credit protection option).
The service comes with credit control support, but the way this works can vary according to your needs. Alternatively, you can retain the collections in house and opt for what is called invoice discounting - this is the funding only (and bad debt protection if you want it - called Protected Invoice Discounting or PID).
Factoring also offers a credit protection option, whereby you are protected against taking customer bad debts. The factoring company will write credit limits on your customers, and providing you trade within those limits, your invoices are covered in the event of your customers becoming insolvent and not paying.
For more details about factoring for road transport sector companies, please speak to Sean on 03330 113622, or use the green quote request form on this page.
- 02 Mar
Construction Sector Protection Against Insolvencies
Construction sector companies are urged to think about protecting their cash flow as recent news reports suggest that insolvencies in the sector have increased substantially.A recent report in CityAM (10th of February 2020), states that whilst the total number of insolvencies in the UK has risen by just under 5%, the situation within the building and construction sector, is that there has been an...
- 25 Nov
How To Credit Check A Customer
Granting credit to customers is often a leap of faith so conducting credit checks on a customer can give some element of comfort to the supplier. However, even the most well known, household names can fail.Recent experience with long established brands such as Thomas Cook, Mothercare and Debenhams (to name but a few that failed in 2019), shows that no one is immune to problems that can lead to...
- 01 Oct
Mitigating The Risks Of Selling To One Major Debtor
When you land a major customer it can provide a huge boost to your business, increasing sales turnover and generating profits. However, there is another side to dealing with a major debtor, and that is the increased risk associated with your trade being concentrated into one customer.In a previous post I covered the risks of selling to a single major customer, often called a "prime debtor". These...
- 23 Sep
You Can't Rely On A Name Like Thomas Cook
Another failure of a well known, long established company proves, yet again, that you can't rely on dealing with a "big name" to ensure that you get paid for services rendered, or products supplied. Sticking to "household names" is no longer enough to ensure that you avoid bad debts.The latest corporate failure, reported by the BBC today, was the holiday company Thomas Cook. After a 178 year...
- 06 Dec
Hospitality And Construction Sectors Top The Insolvency Index
Looking at some figures in Business Money, published from the Creditsafe Insolvency Index, it appears that the hospitality sector (hospitality, hotels, restaurants and bars) tops the insolvency index, followed by the construction sector and then manufacturing. Worrying if you supply those trades with goods or services.Figures from the Office For National Statistics suggest that generally, the...
- 30 Jul
The Risk Of Customer Bad Debts Is Rising
The risk of customer bad debts is rising as there has been an increase in both corporate and personal insolvencies. It is time to protect your business against the risk from customers taking trade credit. Protection against taking customer bad debts is still on offer at present.REQUEST DETAILS OF BAD DEBT PROTECTIONAn article in The Times dated 28th July 2018 reported that personal insolvencies...
- 23 Apr
Retailageddon - Why Are So Many High Profile Companies In Financial Trouble?
Can anyone explain why so many high profile companies are having financial problems? Is there cause to worry about economic stability?I first started really paying attention to the spate of emerging problems when Carillion collapsed, the second largest UK construction firm. Watching some of the social media commentators that have an interest in the credit insurance sector. Since then there seem...
- 26 Mar
Protection For Suppliers To UK Retail Chains
If you are a supplier to any of the large retail chains, you may wish to review your requirement for bad protection following a number of recent news reports from the retail sector.More problems have emerged from the sector as the BBC report that Prezzo, the Italian restaurant chain plan to close approximately a third of their retail outlets, as part of a creditors voluntary arrangement...
- 28 Feb
Maplin Electronics & Toys R Us Enter Administration
Two more large company failures on the BBC news this morning - both Maplin Electronics and Toys R Us have entered Administration.Administration is an insolvency process whereby a firm of insolvency practitioners, the Administrators, take over the running of an insolvent business (one that cannot pay its creditors as they fall due), in order to maximise the returns for creditors of the business....
- 30 Jan
Pulse On Protecting Against Carillion Bad Debts
I had an email from Pulse Cashflow Finance, one of our funding panel, that I thought raised a great point about the recent failure of Carillion. Their clients will not be suffering any bad debts.They have included "bad debt protection" for all of their clients, including those operating within the construction sector, meaning that their clients are protected from taking a bad debt.OK, so it was...