Increased levels of late payments, debt recovery and bankruptcy for hauliers

According to research conducted by the invoice finance firm, Bibby Financial Services, more than 50% of UK logistics firms had to cut costs during Q1 of this year, due to an industry wide poor start to 2011.

Edward Rimmer, UK CEO of Bibby Financial Services speaking of smaller firms in the sector, said: “The SMEs will be in greatest danger, as the cost of fuel bites deeper into profits of business managers and owners.”

Despite some revenue growth in March the overall figures are disappointing and there is real concern that a significant increase in the rate of bankruptcies will surface.

The index used by Bibby to conduct its research measures the average monthly turnover of 3,000 Bibby business customers from a range of industries and showed that the of logistics customers tracked, 59% admitted they were having to cut costs to prepare for future economic challenges and some 45% confirmed they were doing worse than a year ago.

The figures are no surprise to logistics firms whose typical profile of customer tends to be more blue chip retailers than SME’s whom have been mooted as a major contributing factor in the rise of late payment problems and poor cash flow amongst SME’s logistics firms as the sheer power of the retail giants is helping to squeeze margins and spin out settlement dates of overdue invoices.

Increased debtor days from the supermarkets may not result in bad debts at logistics firms, but the impact is very real and as such, more firms are turning to outsourced credit control to speed up the process and ensure prompt payment and/or invoice finance to inject working capital into the business.

With consumer confidence expected to dip further when the latest figures are updated next month and with the high profile administrations of Focus DIY and Oddbins plus store closures at other chains such as Dixon, Comet, Mothercare, HMV and JJB it is certain that the logistics sector will likely see more misery before any improved trading in the road ahead.

Debt Recovery and Outsourced credit control and two vital services at CCDR as they result in our clients getting the most amount of income for their outstanding invoices. Credit Control, sometimes called business credit management manages credit lines offered to customers, reviews creditworthiness and ensures that payments / customer invoices are collected on time. Debt Recovery is generally the last line of defence as much can be done to avoid this outcome. However, time is usually the critical factor.

If you are worried about how the challenging economic environment will impact your business from your customers paying invoices late, or not paying them at all, get in touch for a no obligation discussion about how Liverpool Debt Recovery specialist, CCDR can help.

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