Rising fuel prices directly linked to company failures and late payment increases

Although its been mooted for some time, one of the UK’s foremost insolvency firms SFP Group says that there is now irrefutable evidence that the ever rising fuel prices are directly linked to company failures.

The analysis by SFP says that of those businesses operating within the transport sector who instruct SFP, more than three out of four of the firms facing insolvency cite rising fuel costs as one of the biggest contributors to their company’s downfall.

According to Simon Plant, a Partner at SFP the problem is only set to get worse: “Businesses in the transport and haulage sectors are taking a huge hit from rising fuel costs….” he says. “….with petrol now over £1.35 a litre (on average), those businesses with narrow profit margins are being squeezed harder than ever, and some to the point of insolvency.

Recent failures include the Suffolk-based bus and coach company, Yellow Star Travel, FG Foster Haulage (a Staffordshire road haulage company), Antrac Ltd (a skip hire company with a £2million turnover) and All Transport Ltd (an Ashford skip hire company, also with £2million turnover)

Mr Plant’s comments come on the back of a Risk Bulletin from credit insurer Euler Hermes UK which showed an 18% increase in overdue payment incident reports in the fuel sector alone, when comparing Q4 2010 to Q1 2011. Such a sharp increase in late payments is often seen as precursor to more administrations.

The bigger picture is that whilst those in the transport sector are feeling the squeeze, the spiralling costs are a constant merry-go-round with haulage firms, manufacturers and end retailers all putting their costs up amid narrowing margins.

As a result, if fuel and energy costs continue to rise it wont just be those in the transport sector that go under, but those firms that are on the fringes of the transport sector who will certainly feel the shockwave as the insolvencies rise.

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 with amongst others, services such as  Debt Recovery and Outsourced credit control.

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