Courierology :

Before you even set up in business as a courier, there are things you can do to reduce the problem of bad debts. If you plan your business properly before you start, and take control of your finances, life will be a lot easier.

remember you're a business!

This one is obvious, but can be easy to forget — as a subby you will provide a business service to other couriers, so they will be your customers not your employers.

That means you should expect to get paid on normal business-to-business terms, and using normal business procedures like invoices and statements.

learn about credit control

Before you go into business for yourself you should learn how credit control works, how to lay out an invoice and what a statement looks like.

have a credit policy

How much will you allow each of your customers to owe you, and for how long?

This will tell you what credit limits to set, and when you should get credit references, and what payment terms to set.

Your business plan and cashflow projections will help you answer these questions.

expect the worst!

When you write your business plan, make an allowance for bad debt. Five percent is probably about right.

spread the risk

You should spread your business over at least six different customers, so if one doesn't pay you can still survive.

Before you take on a job as a subby, these are the things you can do to help improve your chances of getting paid on time:

agree terms

Be clear about the payment terms for the job. If you agree terms like ‘30 days’ is that 30 days from when you do the job, or when you send the POD, or the invoice, or from the end of the month?

know who you are dealing with

Get a full business name, address and contact name and number. This will make sure you send the invoice to the right place, and make it easier to chase up payment if you need to.

get full job details

Try to get a job number, consignment note number or other reference for the job, so you can put them on the invoice and make it easier for them to pay you.

If you are dealing with a one-person business they might not use job numbers.

After you have delivered the load, these are the things that will help make sure you get paid with no problems:

the POD

The subber will tell you how they want the delivery confirmed, usually by text or phone call (remember they are your customer, so they are always right!).

But that is just the first step, and the usual rule is — “no POD, no pay” so you will usually have to send a hard-copy POD by post.

If you don't send the hard-copy POD they will not get payment from their customer so they won't be able to pay you.

the invoice

Send an invoice which includes your invoice number and date, with full details of each job — dates, places and reference numbers.

Also include your payment terms as agreed, with the expected date of payment. And don't forget to include your business name and who the cheque should be payable to, or your bank account details if you are expecting payment by BACS.

You should now expect to wait anything up to 2 months for payment, depending on what terms you agreed. But don't just file your copy of the invoice and forget about it.

watch the credit limit

When you start getting a few jobs from one customer it's easy to ignore the risks and let their debt build up.

Keep an eye on how much they owe you, and if it gets close to the credit limit you have set for them you should:

1. politely decline any further work until you have received some payment from you early invoices, or
2. ask for a couple of credit references from their other suppliers (as long as your credit limit is reasonable and you are professional about it they won't mind — it is normal business practice), or
3. you can pay for a credit reference from a specialist agency like Direct Route or Experian

give them a call

If it's the first job you have done for this courier, give them a call a few days after you sent the invoice.

This will keep your name fresh in their mind in case any other work comes up, and you will be sure you have sent the invoice to the right place and they got it.

Most couriers are honest and are not trying to cheat you. The most common reasons for not getting paid are:

1. misunderstandings about payment terms
2. the subby didn't send a hard-copy POD
3. the subby didn't send an invoice
4. the invoice doesn't show all the information about the jobs
5. the invoice doesn't show the subby's correct business name and address, or payment details
6. the subber is disorganised and hasn't got around to paying yet
7. the subber has a cash flow problem and is dragging it out

Those are the easiest problems to put right, and you will get your money eventually. Some other more serious reasons are:

1. the subber is dishonest and is deliberately dragging out payment for as long as possible
2. the subber is dishonest and has no intention of paying the subby
3. the subber has a serious cash flow problem or financial difficulties and is going bust

Here are some things you can do if your payment is overdue:

1. double check that it is really overdue — check the dates against the agreed terms
2. check whether it has been paid — check your record of cheques received, and check your bank account to see if it has been paid by BACS
3. give them a friendly phone call — this will sort out most payment problems (you will need to tell them the date you sent the invoice, your invoice number, and the reference numbers of the jobs)
4. send a statement listing all outstanding invoices, with a polite letter requesting payment
5. put them ‘on stop’ and tell them you have done it — this means you will not do any more work for them until they make payments to bring them back under their credit limit
6. send a letter asking for payment within seven days or you will apply a late payment charge and put their debt in the hands of a collection agency
7. give it to a debt collection agency

It can be very frustrating when somebody owes you money, and you might be tempted to take drastic action, but it is not a good idea. Here are some things you should definitely not do:

1. harrass or threaten them — you will probably end up getting arrested
2. ‘name and shame’ them on a forum — you should not do this because:
   • it doesn't work
   • you could be banned from the forum
   • you could be sued
   • if you get your facts wrong you will look like an idiot
   • even if you are in the right, it is very unprofessional and other couriers will avoid you