Coach and bus operators must thank their lucky stars that they are unlikely to be directly affected by the collapse of the UK’s second-biggest construction firm Carillion, with the potential loss of 20,000 jobs.
We feel for all the sub-contractors and small suppliers who have been caught up in its wake, already having taken the decision last year to accept 120-day payment terms, and who now face seeing their bills unpaid.
It proves that no business is too big to fail and, in the past, our industry has seen a similar collapse of major players.
Cash is king, and it is your decision how much credit you choose to give a customer, and at what point you say ‘no more’.
It is difficult to say ‘no’ and cut off revenue, and know that it’s unlikely that you’ll ever get work from them again.
What brought down Carillion was the size of its £1.5bn debt pile (against a £5.2bn turnover) which its banks refused to continue funding in the face of repeated profit warnings.
Debt is not a bad thing, as long as it can be funded. Indeed, without external finance most business do not have access to vital investment cash.
But it’s how that finance is structured that can have an impact on your business.
For most operators, vehicles are the biggest purchases and happily there are a variety of options you can choose from. Naturally, your funders will want to see your books, and know that you can service your debt. No one is too big to fail.
