More Driver Solutions
How cashfl ow changed the way we do business
Small and medium enterprises (SMEs) are a signifi cant and extremely important part of the UK economy, making up 99.8% of all businesses in the UK and over half of the total turnover. Cashflow between these businesses is essential for the health of the economy, with late payments and other issues hindering growth and impacting on employees in more extreme cases. T ese businesses will be vitally important to the UK’s
continued growth. As the Government explores economic interventions to help SMEs compete, Emily Cooper and Nicola Tilley, the founders of logistics recruitment company More Driver Solutions (MDS), share the measures they have implemented mitigate these cash fl ow issues, which they believe could benefi t businesses in similar positions; and suggest initiatives the Government could implement to help remedy these issues. 2024 was an eventful year for business, with infl ation,
trade wars and a general election aff ecting businesses in a myriad of ways. For MDS, it was a year of learning hard lessons. While a successful year overall, one event permanently changed an aspect of how it does business and relates to its clients. MDS faced something that is experienced by many
businesses: a major client went out of business while owing signifi cant amounts of money. Emily said: “While there were signs that issues were arising, we had seen the business recover from diffi cult positions before and were hopeful they could survive. Unfortunately, it went under, aff ecting a large portion of the local logistics sector.” Following this, MDS raised its standards for providing
credit facilities and implemented measures to protect the business’s cashfl ow. As part of a wider review of credit processes, MDS performs extensive research on the busi- nesses to which it provides credit and takes a much more comprehensive look at the kind of credit facility it is to provide, including considering more niche options that may not have been considered before.
Nicola said: “Starting with the credit limit, we work
directly with a business’s Financial Director to establish the terms of the facility in relation to the kind and amount of work they would like us to provide, their credit history, and other fi nancial factors. During these conversations, it’s important to relate the amount of credit being provided to the amount of work that can be performed for that amount. T is allows for all aspects of the agreement to be discussed more transparently.” T e business’s credit history will then form the pay-
ment terms MDS is willing to provide, which can then be amended as payment history is established. By partnering with Creditsafe, a credit reporting company, MDS is able to make robust evaluations of a business’s credit history and make decisions accordingly. If a business has a positive credit history, then MDS may off er more lenient terms. Conversely, if a business is unknown or has a questionable credit history, MDS may ask it to pay up front and not off er a credit facility at all initially. Emily added: “We are much more proactive with our
management of existing facilities, actively reviewing those we provide over time and changing them based on the business’s behaviour, considering things like if they’re paying on time and how diffi cult it is to chase them for payment. As a fi nal backstop, we have also procured credit insurance, providing a last layer of protection against any losses that may occur from non-payment.” While MDS has been able to adjust its practices to
protect itself from these situations, other businesses within the sector – especially smaller businesses – may not be able to protect themselves in the same way. Larger businesses are frequently able to dictate their own payment terms, with smaller businesses often required to work with MDS for signifi cant percentages of their overall trade. Small businesses then need to fund the provision of services without being paid for up to 90 days. A small business could increase its prices to off set this risk, but the larger business will also often dictate the amount paid. Furthermore, if the larger business fails to pay on time, then the smaller business can be put in a very precarious situation that aff ects everyone’s livelihood. Nicola explained MDS’s stance on the issue: “To
mitigate this power imbalance, we believe that there should be universal payment terms across all business transactions. T e Government is currently exploring ways of implementing a universal 30-day payment term across all businesses and industries, helping to improve cash fl ow across the economy. A Government-backed late payment fee or levy would be an excellent start, and More Driver Solutions is calling for businesses to be fully consulted on any new measures the Government intends to implement to ensure their applicability to the issues being faced.”
Find more information about More Driver Solutions at
https://moredriversolutions.ltd.uk
FINANCE
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72
