Late Payers

Yes Glen, and they should also assess the credit risk of each prospective customer, establish proper credit control procedures, have a professionally produced business plan and produce monthly management accounts which are discussed at meetings with their accountant on the first Friday of every month.

In the real world though the owner-driver spends 50+ hours a week behind the wheel of a van and what’s left over after paying his expenses barely provides a proper wage.

Chasing overdue invoices is annoying, time-consuming and costs money. Generally companies expect to pay lower rates to owner-drivers than to established companies simply because the O/D hasn’t got the overheads associated with running a back office; the reverse side of the coin is that O/Ds expect their lack of office-support and sources of funding to be taken account of by companies. Most companies play the game fairly – some don’t.

I assume at some stage you’ve used your own ‘in house’ owner-drivers, acting as pseudo-employees? Did you expect them to wait 90 days for payment? Do you or your employees wait 90 days to receive your salary?

The companies that habitually pay late are simply using their smaller suppliers as a source of free credit, while continuing to draw their own salaries and continuing to pay those suppliers that they can’t bully. It seems a bit odd for you to criticise O/Ds for not having resources behind them, while apparently supporting the companies that pay late for the same reason.

Posted under Late Payment

Posted by Alec at 9:36 am, September 1, 2007

10 Comments so far

  1. Glen, I think you’re missing my point. If a company chooses to offer extended credit terms to their customers then that’s their problem, not their suppliers’. If that company then can’t afford to pay its bills on time then why is it their suppliers’ responsibility to obtain finance? Why should an owner-driver who pays all his costs up front provide an interest free loan to a company that can’t manage its own finances properly?

    As for your dream, we’ve already been paid for over 90% of August’s work and around 20% of September’s. How’s that for real life?

  2. I’m quite prepared to admit that we do things differently – we actually get paid in advance for a lot of our work and pretty promptly for the rest of it. What’s to stop other companies arranging the same with their customers?

    That wasn’t really my point though – I just threw it in because of Glen’s ‘dream’.

    The argument that the owner-driver is in business and they should have financial reserves to call on holds no water whatsoever; if the middleman – the subcontracting company – followed that advice then they wouldn’t be in the position of having to pay their suppliers late. Why should the buck stop with the man at the end of the chain who pays all his costs up front?

    If the people who subcontract jobs out on here expect to pay ‘trade rates’ and even lower ‘owner driver’ rates then surely it’s them that should absorb the risk and financial problems of late payment by their own customers. Why should the man at the bottom of the chain take the risk, pay for all his outgoings up front and provide free finance for a larger organisation, presumably more able to obtain credit?

  3. Basic business sense is developing long-term relationships with suppliers and allowing them to take their share of the profit. There’s no sense in leaving a string of bankrupt suppliers behind you; you’ll end up with nobody able or willing to supply you.

    “My father said: ‘You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.'” J P Getty

  4. “no exposure to debtors apart from his own customers”. PMSL – you say that as if it’s a bad thing. What other debtors do you suggest we should be exposed to other than our customers? What other debtors could we be exposed to apart from our customers?

  5. Yes, we are owed a small amount of money from ‘Network’ members if that’s relevant to anything.

  6. No relevance whatsoever then. There’s two parties to every transaction and we take part in the transaction whether as a supplier or a customer. If we’d never done any work for other ‘Network’ members should that exclude me from taking part in a discussion on payment terms?

  7. I think I’m as qualified as anyone to see things from both sides. I’ve been in the industry in various capacities since 1989 and my most recent stint as an owner-driver was between 2001 and 2005.

  8. Jeremy, 92-98 I ran a courier business that was strangled by low margins, factoring agreements, late payments etc. All our suppliers were always paid on time though and the business was sold debt-free.

    I can’t really see what the argument is here. Is anyone actually prepared to say that breaching your agreed payment terms with your suppliers is acceptable behaviour? If not then what’s the argument about? If you need 60 days terms from your suppliers then agree them in advance and stick to them; they’re suppliers not credit cards.

  9. I know your history Glen and I didn’t say you were less qualified than me to pass comment.

    You’ve been considerably more successful in this business than most, including me. You and Jeremy both commented on my qualification to comment, without knowing the facts.
    Let’s just recap on your argument so far.

    You seem to be saying that it’s acceptable for ‘companies’ to lie and cheat, to promise payment terms that they’ve no intention of sticking to, to not have proper credit control and/or credit facilities in place so that they can pay their debts as they become due and to steal extended free credit from those suppliers that they can bully into accepting their terms.

    At the same time you’re saying that ‘owner-drivers’ are in the wrong for not anticipating this behaviour and for not having sufficient sources of funds so that they can pay all their costs in advance AND provide a free source of extended credit to their customers. What’s more you’re saying that they’re in the wrong for aggressively chasing these late payers and for complaining about the late payment.

    I don’t believe for a moment that this is the way you do business Glen and I’m frankly astonished by some of your comments. My own view is that if it’s not possible to run a successful business without grinding some other poor sod’s face in the dirt then I’d rather not bother. Maybe that’s just another facet of my ‘unique business model’ that ‘Proper Businessmen’ find hard to swallow.

  10. Fair enough Glen, what you wrote though seemed to attempt to justify the actions of the late payers while ridiculing the people who find themselves out of pocket due to their actions.

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