Late Payment and Poor Credit Control in the Courier Industry

For some reason there’s a lot of criticism, mainly coming from ‘old hand’ courier companies, about owner-drivers and small same day courier companies ‘moaning’ about being paid late by other courier companies.

While the people ‘moaning’ and threatening to ‘name and shame’ are widely lambasted as being unprofessional, unbusinesslike and not taking normal business practice into account, I can’t help thinking that maybe it’s the ‘old hands’ that have got it wrong.

Should it really be acceptable that new entrants to the business are forced to fall into line with the pre-existing sloppy practices of the courier industry? ‘Real’ businesses don’t allow elastic lines of credit to unchecked, untested and undeserving customers; why is the same day courier industry so different?

Why are the new entrants, at the bottom of the ladder, forced to accept late payments that are mainly caused by the slack credit control practices of the courier companies they subcontract to?

It’s not so much the late payment that’s a problem with some companies it’s the fact that when they take advantage of extending their suppliers’ credit terms they’re sitting on an enormous pile of debt. Lending your hard earned cash to anyone in this industry is a very risky step to take, more so now than ever before.

Even with its shaky finances in the recent past Nissan is a bit of a safer bet than Joe Bloggs Couriers with its ‘fleet’ of hired vans that set up business 3 months ago and is buying jobs from one site to sell on another with a 10% mark-up. 

Is it really the lack of business experience of the ‘moaners’ that’s the problem or the lack of a business plan, business sense and scruples on the part of the people they’re doing business with?

I’ve tried to get this point across in the past and some people have taken it as a personal attack on their integrity, it never was.

There’s a hell of a lot of difference between allowing TNT Express or DHL to take 90 days credit (not that they do) and allowing a 2 bob company like ours to take 90 days credit.

Our company, and most (probably all) of the companies on the exchanges, wouldn’t pass our own credit approval process yet we all trade on the fact that everyone else in the business is so inexperienced that they extend credit terms to anyone that asks with no checks.

If the same ‘inexperience’ and non-businesslike behaviour then causes these people to moan and bleat when they’re not paid on time then in my opinion that’s as much (or probably more) the fault of the people/companies that take advantage of this ‘inexperience’ as it is the fault of the moaner.

My own take on this is that we don’t deserve credit so we don’t take it. We’ve never tried borrowing from the bank, but I’d like to bet that they’d ask for some sort of security if we did. If the bank don’t trust us then why should anyone else? We’re relying on your (everyone’s) ‘inexperience’ in allowing us credit terms, if we don’t pay when we say that we’ll pay then name and shame us by all means.

Posted under Courier Business, Courier Financial Issues, Late Payment

Posted by Alec at 6:42 pm, July 16, 2008

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