As the recession, or ‘downturn’ to put an optimistic slant on it, starts to bite, particularly in the building trade, we’re starting to see more and more new entrants to the same day courier industry. It seems an inevitable feature of every economic slowdown that the industry is swamped with out of work tradesman and redundant factory-workers, keen to put their unused van (or their redundancy payment) to use starting a new business for themselves.

It’s an easy enough business to get into, just a van and a mobile phone required. Nowadays it’s apparently not even necessary to have a collection of maps, or even any map-reading skills; just spend £75 on a satnav and you’re ready for work. That’s the theory at least.

There will no doubt be no shortage of local and national same day courier companies waiting to take advantage of these naïve new starters – high fuel prices, low rates and a general downturn in business has pushed many of their existing subcontractors out of the business and they will no doubt be wishing to put a few more vehicles on the road in the run up to Christmas.

There’s often an (incorrect) assumption that the rates offered by the well-known national courier companies will be the ‘going rate’ and that it must be possible to make a reasonable living at those rates. The reality is that some of the larger and better known courier companies pay their subcontractors mileage rates that haven’t changed for many years. I’ve read recently of one national company paying their subcontractors as little as 44p per loaded mile. That’s £88 for a delivery from Manchester to London, with fuel for the journey costing over £40.

As well as the courier companies wanting to cash in on this new source of fresh meat there’s the internet based scammers circling, all waiting to make a few pounds selling manuals on how to be a freelance courier or charging hundreds of pounds to be a member of their non-existent network.

A quick search on Google brings up a multitude of such dubious offers: ‘How To Become A Courier’, ‘Earn £250+ per day as a freelance courier’, “Make £1,500 a week as a courier’, ‘Join our courier network for just £150’, ‘Become a Freelance Courier’, ‘Want to be a courier? Buy our manual for £50’. It’s all a load of bollocks. Nobody makes £1,500 per week profit driving for a living, even after they’ve been in the industry for 10 years. Most experienced owner-drivers of small vans in the same day courier industry have a TURNOVER of less than £800 per week, often much less than that, for long hours and with high expenses to come out of that figure.

I’d recommend that anyone wishing to become a freelance same day courier should first visit the free forums at www.codforum.org.uk (that’s Courier Owner Driver forum, nothing to do with fish!), whatever your question it’s probably been asked and answered on the forums before. There’s also a lot of useful advice on avoiding the scammers.

I might be giving the impression that it’s not possible to make a decent living as a self-employed courier, but that’s not the case at all. It certainly is possible to earn a living but it’s not as simple as buying a manual or paying £120 to join a network or a web-site. Neither is it as simple as writing a few letters to your local courier companies. It will never be an industry where it’s possible to make untold riches with little effort – you’re driving a van around after all, nothing else, and if it was cheaper for these courier companies to employ drivers rather than using subcontractors then they’d do it. Hard work and dedication can build up a reasonable business, but as a get-rich-quick scheme or as a two month stop-gap venture it’s unlikely to give you the financial returns you’re looking for.

So to recap: DON’T pay for advice that you can get for free, DON’T pay registration or enrollment fees in the hope of receiving work and ALWAYS ask for advice on a forum like Codforum before parting with any money, signing on the dotted line or committing yourself to any new business venture. Oh, and don’t call me looking for work – it’s advertised on our website when we have any.

Somewhat of a self-proclaimed courier industry guru, Tim is quite profuse with his advice to other, less experienced, businessmen on how they should run their same day courier businesses. Some would say that he was well qualified to give such advice, having started Speed Couriers from scratch (along with Martin Rutty) and then apparently playing his part in steering it through its troubles in 2001-02.

The collapse of OnDigital, one of Speed’s largest customers, and their foray into the home delivery market caused severe problems for the business back in 2002, so it might be expected that Tim would be more wary than most of allowing a single customer to become too important to the business, of allowing a business with no history of profitable trading to run up a significant (and potentially damaging) amount of debts and of tying the fortunes of his business to a company that specialises in home delivery, particularly at a time when consumer spending is falling and the home delivery market is contracting.

Nevertheless, and despite already having had a warning about Amtrak’s stability and potential profitability when they went into liquidation in January 2007, Tim (or at least CFL) were willing to provide credit to the newly-formed Netfold Ltd, who had bought Amtrak’s business, and apparently continued to supply them with credit after they failed to file their first set of annual accounts at the due time back in March 2008.

By the time that Netfold Limited t/a Amtrak went into administration on 22 August 2008 they obviously owed Courier Finance Ltd a considerable sum, causing them to apparently ‘cease trading’ on 10 September 2008. These debts presumably didn’t date back to the period before Netfold was due to file their accounts – in fact it appears that CFL were still carrying out work for Amtrak/Netfold right up until the time they went into administration. What the hell were they thinking of?

With all this muppetry in mind I was astonished when somebody brought the latest edition of Courier Direct magazine to my attention. On pages 18-19 of issue 1045 there’s an article written by Tim Gilbert “Don’t let the credit crunch crush your courier business underfoot – Tim Gilbert suggests a few measures to recession proof your courier business”.

The article includes some good advice such as “Regular, up-to-date and accurate financial information is the first priority”, “The right action may involve painful decisions, especially for you and your staff, but it’s always better to face the pain than to lose the business”, “To avoid running out of cash you’ll need to be on top of your credit control”, “In the good times, you may have been able to take money out of the business. In the bad times, the bank, or arithmetic, may dictate that you have to put some back in to enable the business to continue to trade”, “insist on good financial information, keep on top of the cashflow, keep debt to a minimum, and put away some personal money for a rainy day”. The phrase Physician, heal thyself comes to mind.

The one piece of advice that is sadly missing is to keep an eye on your major customers’ financial situations on a daily basis – they’re exposed to recession in exactly the same way as you and they might not have taken the necessary steps to recession-proof their businesses.

Presumably the article was written shortly before Amtrak/Netfold’s demise and published at this entirely inappropriate time a few weeks later. It would be very cynical of me to imagine that this important piece of advice was left out of Tim’s article because he wasn’t too keen on CFL’s many suppliers looking too deeply into their obviously precarious financial situation. No, I think that would be to overestimate his intelligence. I think the plain fact is that he’s an arse, a muppet, a fool, and that he spent so much time advising other people on how they should run their businesses that he lost sight of what was happening to his own.

And on that note I’m off – I’ve got a business to recession-proof.

Yes, Amtrak Express Parcels has gone bump for the second time in 20 months. This time it’s Netfold Ltd, the ‘white knight’ that bought the business from the administrators of Amtrak Express Parcels Limited in January 2007, that’s been put into administration.

This one caught me by surprise a bit – I predicted last summer that one of the parcel networks had less than a year to survive, but not Amtrak. As it turns out the two companies that I’d earmarked as possible contenders for the wooden spoon have both reported increasing turnover and profits, the one that I predicted would do great things this year seems to be in terminal decline and now Amtrak, acquired on presumably very good terms from the administrators, has gone into administration.

Alarm bells first started to ring in April when I noticed that Netfold Ltd had failed to file its accounts by the due date. It may seem slightly naïve of me but I’ve always held the belief that a company that doesn’t file its accounts by the due date is either suffering from incompetent management, is unable to pay their accountants’ bill or they have something to hide. While incompetent management is only to be expected from many start-up businesses in their first year of trading, it’s hardly excusable when the business in question has a claimed £80m turnover and is run by a team of experienced businessmen.

One of the company’s administrators from Ernst & Young commented “Amtrak has found trading in the current economic climate challenging. It is a business led by consumer demand and as consumer spending power has weakened Amtrak’s business has suffered.”

Possibly they’re right – Amtrak have been keen to present themselves as a B2C carrier rather than B2B, possibly the slowdown in consumer spending is hitting them worse than other carriers who concentrate on B2B deliveries. If that was the case would it really have been so hard to realign their offering? They already carried out a significant amount of B2B work and they certainly had the infrastructure in place to be as successful in the B2B marketplace as any other carrier. Business Post, Tuffnells and TNT Express, to name a few, have all managed to increase both their turnover and their operating profits in the same economic climate that has apparently caused Amtrak’s problems.

In fact, apart from Amtrak, the only major UK carrier that seems to be experiencing any serious problems at the moment is City Link, and in their case, as I suspect might be the case with Amtrak, the problems are entirely due to bad management. In City Link’s case they made the mistakes of buying back the franchises of depot’s that have formerly been micromanaged by the franchise owners and then tried to manage the depots remotely while at the same time trying to integrate two different networks and divest themselves of accounts that they perceived to be unprofitable.

This level of change has resulted in the merged City Link and Target turning round from being well run and profitable, to losing £29m in the last 6 months.

Maybe it’s ‘change’ that’s the issue, maybe it is just bad management, I don’t know. It seems to me that under normal circumstances all the major parcel networks have developed into major players by learning how to turn a profit using their own particular operating methods; they attract customers who are happy to work within the constraints of those operating methods. When new owners come along, or just new management structures, both the employees and the customers have to adapt to the new owners requirements, methods and management. Some companies (TNT is the perfect example) seem to manage these changes much better than others, maybe realising that the co-operation of all their employees and suppliers, as well as good communication with their customers is the key to success.

Anyway, back to Amtrak and Netfold Ltd, reading between the lines it seems that Business Post may have made a ‘goodwill only’ purchase from the administrators and will be keen to establish business relationships with Amtrak’s former customers. Having a vague idea of the operating methods and capabilities of both companies I can see that many ex-Amtrak customers will feel very comfortable with a changeover to Business Post.

I’ve warned many times of the dangers of running businesses like this and it seems from anecdotal evidence that some companies are finally having to count the cost of paying their suppliers late.

With the soaring cost of fuel and the general slowdown in the economy it seems that some transport company owners have decided that it will be more profitable to cease their transport operations and concentrate on collecting the outstanding debts accumulated under the late payment legislation.

The Late Payment of Commercial Debts (Interest) Act 1998 (see http://www.payontime.co.uk for further information) gives businesses a statutory right to claim daily interest from other businesses for the late payment of commercial debt. In addition businesses have the right to a compensation payment of between £40 and £100 for each invoice which is paid later than agreed terms. If no terms are agreed then the terms default to the later of 30 days from the day the service is performed (for pre-agreed amounts) or 30 days from the date the cost is confirmed.

Both the interest and the compensation payments are chargeable on each invoice paid late, are payable on demand and are claimable up to six years after the date they become payable – i.e. up to six years after the payment becomes late. They are payable even after the initial debt has been paid in full.

Companies are potentially storing up a time bomb by paying their customers late. As an example, a courier company which carries out 5 local jobs per week for a customer over a 6 year period, each one of which is invoiced on a separate invoice and each one of which is paid late, could potentially issue a claim after 6 years for £62,400 against that one customer in late payment compensation charges alone.

If a company issues just 25 invoices each week which are paid late then after 6 years they have ‘earned’ over £300,000 in late payment compensation charges, assuming their customers are still trading. For a transport company earning minimal profits in the current financial climate this is a tempting alternative income stream.

Of course many companies are reluctant to claim late payment charges, but the debt exists whether they claim them at the time or not. What seems to be happening at the moment is that companies are looking back at debts that have been paid late in the past and if they’ve not traded with the customer for a while, or they don’t really care if they lose the customer’s business, they’re putting in their claims under the late payment legislation.

We’ve recently received a claim such as this from an ex-supplier for 3 invoices which he believed were paid late in early 2006. The supplier actually ceased trading a few months after the invoices were issued but being a sole trader the individual concerned has chosen to supplement his current income by milking the customers of his previous business.

In our case he was unsuccessful – we’d settled all the invoices with his factoring company on the day they were received; we assume that the factoring company (as they often seem to) had applied our payments to the wrong invoices or the wrong account. We were saved from having to pay £121.17 purely because we’d both paid the invoices on time AND kept a proper record of the date the invoices were received and the date the invoices were paid. In the latter respect we were helped because we only ever pay our suppliers by BACS or online banking and always keep a proper record of the date the payment leaves our account.

I would suggest that anyone wishing to protect themselves against future claims under the late payment legislation takes the following steps:

1. Keep a record of all debts as they are incurred. Using a Purchase Order system will help achieve this but it’s not essential. When you receive goods or services from your supplier make a note of the date, the supplier’s name and the amount due and check off each invoice received against your list at the time of receipt. If you’ve not received an invoice within a couple of weeks of receiving the goods or service then contact the supplier to chase the invoice – fax or email is best because you can create an audit trail of having requested the invoice.
2. Record any invoices as they’re received. Date stamp every received invoice and check it off against your list of due invoices.
3. Pay the invoice within the agreed terms. If you didn’t agree terms at the time you ordered the goods/services then check if you were expected to have read and agreed to the suppliers standard terms before ordering. If no terms were agreed or specified by the supplier then pay the invoice within 30 days of either receiving the goods/services or the invoice date, whichever is earlier.
4. Notify supplier of queries or disputes. If the invoice is disputed or queried then inform the supplier at the earliest opportunity and keep a record of the date that the dispute/query was raised and the date of the response. If the dispute/query is resolved then pay within the original agreed term (or 30 days if no agreement) or within  a reasonable time (say 7 working days) of the resolution of the dispute. Keep a full record of all relevant actions, the date, time and the people involved.
5. Pay your suppliers by BACS or online banking. It’s easier to prove that the payment left you account on the right day than it is to prove that you didn’t  date all your cheques 3 weeks before you sent them. We save a screenprint of every online banking payment so that we can quickly check when payments were made without contacting the bank for confirmation. The screenprint doubles as a Remittance Advice for sending to our suppliers by email.
6. Agree payment terms in advance. If there’s an ‘understanding’ with your supplier that you will pay on terms other than 30 days from service (or 30 days from invoice) then ask your supplier to agree to the terms in writing before any work is carried out. Stick to the terms that you’ve agreed.

All this is a lot harder to write down than it is to do. It takes no real investment in time other than the initial planning of your system. Your list of invoices you’re due to receive should already be available in your booking or accounting system. If not then a simple list in Excel (or even in a notepad) of every purchase you make, will be a useful source of information for your business in any case. We run just such a list in Excel, revenue and cost recorded for each job, and the supplier’s and customer’s name. We can see profitability of a day by day basis, see which suppliers haven’t invoiced us and easily see which customers produce the most profit for us.

On a closing note, it should be noted that these late payment charges are assignable. Even if your mate Joe’s business doesn’t charge you when you pay late, the subsequent owners, or liquidators, of the business may chase you for late payment charges.

If it’s not happened already it seems only a matter of time before companies are set up to buy the rights to accrued late interest charges from failing businesses. When this happens there will undoubtedly be a lot of businesses whose bad payment record will come back to bite them.

You may be interested in this page, giving the specifics of a claim for late payment charges that we made against an ex-customer.

The ex-customer engaged a top firm of solicitors to avoid paying the claim, presumably at condiderable cost, but ended up paying our original claim plus court costs anyway.

I’m very confident that we would have won the case no matter what, but the notice about late payment charges on each of our invoices avoided us having to go to the trouble of actually proving the case in court.

Download the template here (MS Excel template file) or view it as a pdf file here.

Of course you don’t have to invest in a copy of Excel just to produce a few invoices, OpenOffice.org has most of the functionality of Excel (and other MS Office products) and it’s free. The template opens OK in OpenOffice but needs some slight adjustments for page margins and layout etc.

Google Docs allows you to produce invoices and other documents online and export to Excel or OpenOffice if required. They have their own invoice templates available and again it’s all free of charge.

Zoho.com is another online office suite, similar to Google Docs, with a lot more thrown in as well. They have their own dedicated online application for raising invoices invoice.zoho.com but annoyingly they’ve now seem to have started charging for its use.

Microsoft Office Accounting Express is FREE, fully featured, small business accounting software. For a free product it compares very well with the basic versions of Quickbooks and Sage, allowing you to raise and track invoices, enter bills, keep track of what you owe and what you’re owed etc, and did I mention that it’s FREE? It’s even upgradeable to the more advanced Microsoft Office Accounting Professional for about £150 if you find that you’ve outgrown it.

To satisfy HMRC you need to include on your invoice:

The date of issue of the invoice.
A sequential number that uniquely identifies the invoice.
Your business’s name, address and VAT registration number.
The name and address of your customer.
Your customer’s VAT registration number (only if they’re VAT registered in another EU country and you’re invoicing without VAT).
The date of supply of services (the date you did the work).
A description of the services supplied (from a VAT point of view ‘Courier work’ would be OK – your customer may want more detail).
The VAT rate applied (normally 17.5%).
Total amount of VAT payable.
The total amount payable for the whole invoice excluding VAT.
The total amount of VAT charged at each VAT rate (normally just one entry for the 17.5% rate).
The unit price of the services supplied and the number of units charged for – if this is normal practice for your industry (as far as I’m aware it isn’t normal practice in the courier industry) or required by your customer. In practice you can ignore this unless you charge your customer by an agreed price per mile or hour worked AND they’ve asked you to include the figure on your invoice. For example ’200 miles @ 70p/plm’.

To satisfy Companies House and Trading Standards:

If your business trades under a name other that its actual name then you must include the actual name on your invoice, as well as the trading name.

If you’re a sole trader John Smith and you trade as ‘John Smith’, ‘J Smith’ or just ‘Smith’ then that is the only name that needs to appear on your invoice.
If you’re a partnership of John Smith and Alan Jones, and trade under any combination of the names (‘Smith & Jones’, ‘J Smith & Alan Jones’ etc) then those are the only details needed.
If your business is a limited company and it trades under its own name ‘S&J Courier Services Ltd’, then that’s the only name that needs to appear on your invoices.

In any other case, where the business trades under a name that is not its actual name, the full actual name of the legal entity behind the trading name must be shown on all invoices. So if John Smith trades as ‘John Smith Couriers’, or John Smith and Alan Jones trade as ‘J&A Couriers’, or even if S&J Courier Services Ltd trade as ‘S&J Courier Services’, then the actual name of the sole-trader, the partners or the limited company must be shown on the invoice.

To keep you customer happy

The date you did the job.
The collection and delivery details – I prefer the format ‘XYZ Semiconductors, London E14 – ABC Computers, Manchester M30′.
Any reference if you’ve been given one by the customer – otherwise use the name of the person who booked the job.
Any purchase order number supplied by the customer – if it’s the first job you’ve done for them it doesn’t hurt to ring them and ask them what they need to appear on the invoice.
The POD for the job – often not essential with end-users but other transport companies like to get their PODs. Also attach the original hard copy POD to your invoice, KEEP A COPY FOR YOUR OWN RECORDS THOUGH.
Your bank details. – Most companies pay by BACS or internet banking these days. Make the payment process as simple as you can for them and avoid any excuses for late payment.
Invoice promptly – if it’s a one-off job then don’t leave it until the end of the month, do it now.
Invoice accurately – only invoice for the agreed amount. if there are any additions for waiting time, call-outs etc then agree the charges with the customer at the time that the cost is incurred.
Don’t backdate your invoice. If you don’t get round to sending your invoices until the middle of the month then don’t date them at the end of the previous month. Large companies may not notice and you’ll be paid as and when your invoice is cleared, small companies may get annoyed at being presented with an invoice due for payment within a few days of receipt.

To avoid any problems in the future

Spell out your payment terms and the due date on the invoice.
Explain the methods of paying the invoice – “Cheques should be made payable to XYZ Couriers…etc” “BACS payments may be made to Account no……etc”
Don’t mention unreasonable and un-agreed penalties for late payment on your invoice.
Draw the customer’s attention to the Late Payment legislation – “WE UNDERSTAND AND WILL EXERCISE OUR STATUTORY RIGHT TO INTEREST AND COMPENSATION FOR DEBT RECOVERY COSTS UNDER THE LATE PAYMENT LEGISLATION IF WE ARE NOT PAID ACCORDING TO OUR CREDIT TERMS.”
Draw the customer’s attention to your Conditions of Carriage, Conditions of Trading, Terms & Conditions, or whatever “ALL BUSINESS UNDERTAKEN IS SUBJECT TO OUR CONDITIONS OF TRADING – A COPY OF WHICH IS AVAILABLE ON REQUEST – or go to www.quietlyefficientcouriers.co.uk/conditions.pdf” This won’t automatically mean that the job you’re invoicing on this occasion will be covered by those conditions, you should have agreed that in advance, but it will help you show that your Conditions apply to any future work you carry out for the customer.

www.payontime.co.uk/doctor/doctor_main.html

The Late Payment of Commercial Debts (Interest) Act 1998 gives you the right to claim interest and compensation for late payments.

This is a statutory right – your customer doesn’t have to agree to it, you don’t have to inform them in advance that you intend to charge them if they pay late and you are not permitted to agree in advance to waive late payment fees unless a suitable alternative form of late payment penalty is agreed.

For invoices up to £999.99 you can charge £40 PER LATE INVOICE. For invoices of between £1,000.00 and £9,999.99 you can charge £70 PER INVOICE. You can also charge interest on a daily basis, currently at a rate of 13% per annum.

You don’t charge VAT on the late payment or the interest and you don’t charge the late payment fee on a recurring basis.

You don’t HAVE to charge the late payment fee but unless you’ve specifically agreed to waive the fee the late payer still owes it to you EVEN AFTER THEY’VE PAID THE ORIGINAL DEBT. The late payment fee is like any other debt – you have up to 6 years to recover it from the late payer and remember that it’s chargeable on EVERY payment received late over that period.

You may find that it’s best to use the threat of the late payment legislation as a tool to get late payers to pay up. For example, our standard collection letter includes:

“As you may be aware, under the Late Payment of Commercial Debts (Interest) Act 1998 we have a statutory right to charge interest on overdue payments. The current rate of interest is 13%. We also have a statutory right to charge compensation of between £40 and £100 towards our collection costs. You will notice that your statement includes an invoice for the late payment charges. IF WE RECEIVE PAYMENT OF ALL OTHER OUTSTANDING INVOICES WITHIN 7 DAYS OF THIS LETTER WE WILL NOT PERSUE THESE CHARGES.”

This at least gives the customer the chance to pay up straight away and avoid the extra charges. It’s worth mentioning that if you use this approach and they do pay up within the 7 days then you’ve lost your right to go back within 6 years and claim the late payment charges.

Thomas Higgins solicitors will do the whole thing for you for a small fee. Direct Route are often recommended for business to business debt collection but I’ve heard several reports that they seem unwilling to collect late payment charges.

In 2006 a 45-year-old Toyota employee died, apparently from working less than 20 hours overtime per week in the run up to launching a new product.

His death has now been classed as an industrial injury, meaning that his family can claim against his employers’ insurances.

60 hours per week is classed as a short week by many in the UK same day courier industry. While HGV drivers are limited by law to 48 hours work a week and any employed workers can insist on working a maximum of 48 hours per week with 5 weeks holiday per year, many courier owner-drivers and courier company owner-managers work in excess of 70 hours per week with few if any holidays.

For the working man, doing his best to provide for his family, is it not better to have a few more years to spend with the family, rather than a few extra quid each year and an early death? Life is apparently a journey, not a destination.

(Written by me, working at 1837 on a Saturday evening)

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.

Unless you only ever carry goods under your own ‘Terms and Conditions’ or ‘Conditions of Carriage’, which you make available to your customers before you carry out any work for them then you could be wide open to a claim for unlimited damages from your customer or even from your customer’s customer.

Your Goods In Transit insurance might well cover you for £15,000, but what if the goods you’ve collected are worth far more than that? A consignment of computer chips or a pharmaceutical sample can be worth many times that and if it was lost, stolen or damaged while under your control you would be liable for the full value unless your Conditions limit your liability.

That’s not the worst of it though. Most couriers’ Conditions quite rightly disclaim any liability for consequential loss. Without this essential restriction to your liability your losses are potentially unlimited should a late, lost or damaged consignment cause your customer any financial loss due to your ‘negligent act’. A ‘negligent act’ could be as simple as you leaving goods in your vehicle overnight and them being stolen, being late for a delivery because your cambelt broke due to being overdue for replacement, subcontracting your delivery to a muppet or just sending a document by overnight delivery and it being misrouted.

In the absence of suitable Conditions the only defence that you may have against a claim is to be able to prove that your customer’s loss occurred through no negligence whatsoever on the part of you, your employees or your subcontractors. In practice this may mean a delay or loss caused by an ‘act of God’ (exceptionally severe and unexpected bad weather for example) or a catastrophic and entirely unpredictable delay on the motorway system  – for example if you collect something the day before for 0900 delivery to London then a 1 hour delay on the motorway at Luton would not excuse a late delivery because it should be anticipated. If the motorway was closed for 4 hours because of an accident then it may be a delay that you could show that you were not able to anticipate.

What does ‘consequential loss’ mean and isn’t it already covered by your Goods in Transit Policy? Consequential loss applies not to the value of the goods that you’re carrying but to the financial loss that may be suffered should they not be delivered according to the customer’s requirements. By way of example, imagine a simple job where you collect an envelope from your customer for delivery across town within 2 hours. You leave the envelope on your dashboard and it blows out of the window without you noticing and it’s lost forever.

With proper Conditions you may be liable for around £15 for the loss of the paper and the envelope and you probably won’t be able to charge your customer for the delivery. Without any Conditions your moment of inattention could mean that the multi-million pound property deal that your client was about to seal with the contract that you were carrying doesn’t go ahead and YOU are legally liable for their entire financial loss. You’re a sole trader – so if they claim their losses you lose everything, all your savings and all your possessions.

Maybe that scenario seems a bit far-fetched, so how about that custom-made machine part that you’ve just collected from a freight forwarder for delivery to a manufacturer? The production line’s been down for 3 days at a cost of £20,000 per hour. You ‘thought’ that you’d strapped the pallet down properly but you take a corner too fast, the pallet slides and damages the goods. That’s say £40,000 for the damage to the machine part (only £15,000 covered on your insurance) and a further 3 days at £20,000 per hour (a further £1.44 MILLION in costs) for the stopped line while a new part is manufactured and delivered.

Without proper Conditions you are liable for losses like these. The good news is that it’s very simple to avoid the risk of being held liable for this type of claim. If you’re a CX member you have the benefit of being able to use their “Model Terms and Conditions”. If you’re not a CX member then the FTA allows use of their “Model Conditions of Carriage” by non-members as long as their copyright is acknowledged.

In my (non legally trained) opinion, neither sets of Conditions are entirely appropriate to the same day courier industry, but as a stop-gap measure they are better than no conditions at all. I hope to be able to point you towards some more appropriate Conditions in the near future.

In the meantime your main challenge may be to ensure that you can show that your customers have had the opportunity to view whatever conditions you may have before entering into a contract with you. If there’s a clear link on every page of your website and you’ve confirmed that your new customer has visited your website then you should be on fairly firm ground. If you’ve already carried out a job for someone without giving them the opportunity of viewing your Conditions then you can protect yourself in the future by simply adding a notice to the first invoice that all future work carried out will be subject to your Conditions. It doesn’t protect you from liabilities incurred during the first job but if you draw their attention to your Conditions at every available opportunity then you should hopefully be protected against future claims.

Unless you’ve taken the (sometimes sensible) option of starting your registration on a date in the future you could have a period of 3 months or longer when you’re liable to account for VAT on all your sales but you’re not legally able to charge VAT. This obviously leaves you with a problem.

You’re not legally able to show the VAT as a separate amount on your invoice unless you’ve received confirmation of your VAT registration.  HMRC’s solution is for you to issue a VAT-inclusive invoice to your customers. So instead of invoicing £100 you would invoice £117.50 ‘including VAT’. If you’ve got a close relationship with all of your customers and you can get them to agree to this in advance then this is without doubt the best option: please read on however.

Most established companies, particularly in the transport sector, will not pay VAT on an invoice unless it’s a genuine VAT invoice containing a VAT number and the VAT shown as a separate amount. You are not allowed (or able) to supply these details on your invoices until you receive confirmation of you VAT registration. If you use the HMRC approved method above (invoicing inclusive of VAT), without the prior agreement of your customer, you may well find that your customer delays payment of your entire invoice until they receive a proper VAT receipt.

The alternative method of dealing with this problem is to invoice for the normal amount, say £100 using the example above, with a clear notice on the invoice stating that you are awaiting VAT registration and a full VAT invoice showing the outstanding VAT will be issued as soon as your registration is confirmed. This avoids the delay that will almost inevitably be caused if you issue a VAT-inclusive invoice as recommended by HMRC.

Once your VAT registration is confirmed you send them an invoice for the full amount, with the VAT itemised, with a credit shown for the original amount (if that’s already been paid) and just the VATshowing as outstanding. If you’re ONLY invoicing for the outstanding VAT it can be seen as helpful (or at least ‘friendly’) to show the ‘payment due’ date as the last day of your own VAT quarter.

Remember that you can reclaim the VAT on many expenses incurred BEFORE your registration date. I’ll cover that in a future posting.

Is this a wind-up?

“The game is an online sim game, set in the courier industry. We’ve been planning and building now for a couple of months, and now we’re into the artwork and design phase, so we’re starting to see it growing fast. Fantasy Couriers is a simulation game set in the courier industry. This industry has been chosen as it it probably one of the most challengling markets in the world at present with ever increasing fuel prices. So, to make the game as challenging as the real world, the prices of fuel in the game are pegged to the prices of fuel in the real world. If the oil companies increase the pump price, or if Gordon Brown puts a penny or two on fuel tax, YOUR PROFITS in the game suffer, you may end up running jobs at a loss, it could make you bankrupt.”

Quote:
you shouldn’t knock peoples rates just because they are higher than your’s….sometimes company’s don’t give trade rates ,it’s happened to me many times when ive posted job’s.

not everybody run’s cheap,the only place you’ll find cheap prices is on web sites.

web sites are not the be all and end all….if you put all the member’s of c/x ,mt van ,shed five etc together they are only a small percent of the courier co’s and o/d’s in this country….and you’ll usualy find that those that go nowhere near web sites are running at a lot better rates.

There’s plenty of ‘non-website’ companies and owner-drivers out there though who seem happy to charge much less than the sort of rates you seem to expect Paul

I was contacted recently by a company that I used to work quite closely with years ago – 8 or 10 vans, run from home, you know the sort of thing. They do a lot of subcontract work for the ‘big boys’ and they used to charge me the same rate as they charged TNT – 50p/mile for a small van. 10 years or so later on they asked me if 58p/mile would be alright!

There’s another company I use, member of the DA or NCA or something, well established, mainly deal with end users and they’re not on CX or MTvan or anything. First time I called them out of the blue they offered me lower rates than I usually pay owner-drivers on CX. The collection went tits up and they charged me £8/hour waiting time!

As you quite rightly say Paul, there’s a lot more to the courier industry than exchange websites. You’d be wrong to believe that the situation in the ‘outside world’ is much better than on these sites though; in many cases the opposite is true.

I think it was “the DHL of temperature controlled transport” wasn’t it? Old hat, already being done on a national basis, and I’d like to bet that their historical profits didn’t include a ‘real life’ depreciation of their major assets – which means some major ‘readjustments’ in a couple of years’ time.

Load of bollocks. Stand on me.

Keith and his Reggae Reggae Sauce on the other hand…..

Your company seems to be a bit late in filing its annual accounts. Is there something to hide or is it more indicative of poor management?