starting up

[ianyng]

If you’ve got one motor, you have to prove an available balance in your account of £6200 and £3400 for every subsequent vehicle.
You must be be able to show the money was available for 3 months proir to a first application. They total up you statements and divide by 3 to find the average.
They do have some flexibility, although this does vary between regions.
If you don’t have the money sat in your account for the 3 months prior, they can grant an o’licence but ask you to re-prove your financial standing in another 3 months. This can go on for as long as they want it to.
Last months commercial motor had an article in the legal section about an operator who couldn’ prove the money. They revoked his licence.

Even if your whole fleet is covered under an r&m package, you still need the money in the bank - it’s law.

Ian.
Hauliers mental hospital.

[coffeeholic]

If you haven’t got too many vehicles get a credit card with a limit that covers the amount required to show financial standing then don’t use the card so the funds are always available. Job done.

The money doesn’t necessarily have to be available immediately but must be available within one month, if for example it was held in a higher interest Building Society account that requires notice of withdrawal

The reason you still have to prove financial standing in the case of leased vehicles with full R&M is due to the penalties, which can be quite large, that can be incurred if you terminated the contract early.

[paul_b]

well i’ve trawled through everything i can find and came up with nothing that says you need to keep the amount per vehicle available in an account after you’ve been granted your o’license? perhaps i’m reading it wrong but i wonder if that is the case, what would happen if something unforeseen had occurred to force you into using that back up money? your wagon chucks an engine three hundred mile from base, a customer goes pop owing you money etc?
does that mean you loose your o’license because you can no longer show your of good financial standing?
i can only speak of my own business which is, in the last eighteen months i’ve only ever had to show finances once which was when i first applied for a license, since then i’ve had change of vehicles, change of category of vehicle, change of cpc holder and change of maintenance contract but not been asked to show any financial records at all, although because i sub contract i could show two months money owed at any one time which would far exceed the six thousand odd quid required for one wagon (i’d hope so anyway) so i suppose that by trading your in effect meeting that criteria without thinking about it?

[routier]

that x amount of money per wagon is available to you if your a new start, i.e starting from scratch, if your an existing company who has been trading a while who has then applied for an o’license, you need to show three months bank statements which don’t require any set amount but purely need to show you’ve traded in a proper manner

So lets say ive got £6200 which Ive just acquired today (either be it by whatever source) and show them a bank statement showing that I have recived the funds today, will I be granted a licence or will I have to sit on that money for 3 months and show 3 months statements that I have held £6200 for the last 3 months ?

Credit Card is a good way which I did before but had problems as the cards were in my name and not the Ltd Companies! I had to argue the case and got it.

[spaceman]

I’m getting giddy from dancing around in circles, banging the head against a brick wall — an overload of Déjà vu (and Stella)

This is the VOSA document to read:-

http://www.vosa.gov.uk/vosa/hgvpsvoperators/hgvpsvregulations/practicedirectionfinance.htm

Okay, so its not clear as mud and they could’ve done better. But it does give the answers.

It is clear that the Financial Requirement has to be met at all times — exactly the same as the requirements to continue to be of good repute, have a TM and an O’Centre.

You also need to meet the finance requirement for vehicles on your “margin” (which the TC encourages us to have!).

I don’t like the way they refer to “working capital”, because you clearly can’t work it!

If you do need to dip into it (Paul’s example of an engine blow and recovery) then you still need to show that, on average over a 3 mth period, you satisfied the requirement. This emergency money (my way of seeing it) should not be allocated from your R&M budget — its rainy day money.

The really grey bit is how this average is calculated.

I can see the TC’s getting a lot harder on start-ups, and in some ways, I would support this. Anyone who can demonstrate they “just about meet” the financial requirement, but have not yet sourced a truck, paid insurance and suffered 60 days terms of trade (or been fleeced), could be in trouble if they only have £6K ish. Perhaps they are right only to licence people/firms that are savvy and have a realistic plan?

The TC wants to see liquid funds. To most of us on here — that’s cash in the bank, or as Neil says, a line of credit you can drawer on quickly. Not balance sheets or accounts receivable — that’s big boys stuff. If you do show your balance sheet, then a Current Asset to Current Liability ratio (acid test) dipping below 2:1 will raise a few eyebrows.

Maybe, when we all agree on the interpretation of the rules , Neil (if he’s not being the grumpy old man this week ) could put a sticky for newstarts to read, or be referred to?

[spaceman]

Back to the original post - there is also the Vat application — they don’t hand out registration on a whim — I got rejected first time and had to send them a business plan!

[coffeeholic]

spaceman:
Maybe, when we all agree on the interpretation of the rules , Neil (if he’s not being the grumpy old man this week )

That’s most weeks at the moment, and don’t even get me started on next week. Bloody UK work

spaceman:
could put a sticky for newstarts to read, or be referred to?

Not my forum, Denis F or North Surrey Haulage are the guys who make the decisions in here.

How’s that for dodging work?

[spaceman]

Not my forum, Denis F or North Surrey Haulage are the guys who make the decisions in here.

How’s that for dodging work?

Oh so very “not my counter” (Grace Bros to you , Tesco’s to us young kids )

[coffeeholic]

[denis_f]

[wheel_nut]

So if you only need the available capital at startup, why is Mr Stobart struggling so much to hold onto his licence?

Isnt it because that ex poacher turned gamekeeper Geoffrey Simms has got his claws into his operation for exactly this reason?

According to Trucking, £1.08 is the average price per mile and they are even stating that fuel is close to a quid a litre, fortunately I understand the VAT element.

[paul_b]

spaceman:
I’m getting giddy from dancing around in circles, banging the head against a brick wall — an overload of Déjà vu (and Stella)

This is the VOSA document to read:-

http://www.vosa.gov.uk/vosa/hgvpsvoperators/hgvpsvregulations/practicedirectionfinance.htm

Okay, so its not clear as mud and they could’ve done better. But it does give the answers.

It is clear that the Financial Requirement has to be met at all times — exactly the same as the requirements to continue to be of good repute, have a TM and an O’Centre.

really?

You also need to meet the finance requirement for vehicles on your “margin” (which the TC encourages us to have!).

I don’t like the way they refer to “working capital”, because you clearly can’t work it!

If you do need to dip into it (Paul’s example of an engine blow and recovery) then you still need to show that, on average over a 3 mth period, you satisfied the requirement. This emergency money (my way of seeing it) should not be allocated from your R&M budget — its rainy day money.

The really grey bit is how this average is calculated.

not so grey, basically if your earning and running everything through the bank your average should far exceed the minimum required even if you started with nothing.

I can see the TC’s getting a lot harder on start-ups, and in some ways, I would support this. Anyone who can demonstrate they “just about meet” the financial requirement, but have not yet sourced a truck, paid insurance and suffered 60 days terms of trade (or been fleeced), could be in trouble if they only have £6K ish. Perhaps they are right only to licence people/firms that are savvy and have a realistic plan?

so , ok for you to start up with the minimum as everyone did but you don’t want anyone else to have the same opportunity?

The TC wants to see liquid funds. To most of us on here — that’s cash in the bank, or as Neil says, a line of credit you can drawer on quickly. Not balance sheets or accounts receivable — that’s big boys stuff. If you do show your balance sheet, then a Current Asset to Current Liability ratio (acid test) dipping below 2:1 will raise a few eyebrows.

incorrect, it’s not big boys stuff it’s basic business! perhaps you should go back to link your so fond of read the bit about sub contract work?

Maybe, when we all agree on the interpretation of the rules , Neil (if he’s not being the grumpy old man this week ) could put a sticky for newstarts to read, or be referred to?

perhaps we should get our facts right before we try to give advice?

[spaceman]

Try this one - its a bit more Janet & John.

http://www.kogan-page.co.uk/lowe/TMOHc01.pdf

The Financial Requirement bit starts on page 18.

Note the limits shown are the pre 01/01/2005 requirement.

not so grey, basically if your earning and running everything through the bank your average should far exceed the minimum required even if you started with nothing

That assumes income is exceeding expenditure and positive cashflow. Never had a bad month? If everything in the garden is so rosie, why do people go bust?

so , ok for you to start up with the minimum as everyone did

I operate under a “ltd” banner. I didn’t start with the minimum - I had a business plan - I put in enough to continually meet the finance requirement for 2 vehicles, buy the first truck, pay the insurance and other start-up costs AND to cover the inevitable negative cash flow

but you don’t want anyone else to have the same opportunity?

Did I say that?

incorrect, it’s not big boys stuff it’s basic business! perhaps you should go back to link your so fond of read the bit about sub contract work?

A contract that guarantees a fee will be paid, even if the work dries up and the truck stays in the yard? If this is what you have, then you’re laughing and I’m jealous.

perhaps we should get our facts right before we try to give advice?

Agreed

Wheel Nut:
So if you only need the available capital at startup, why is Mr Stobart struggling so much to hold onto his licence?

Isnt it because that ex poacher turned gamekeeper Geoffrey Simms has got his claws into his operation for exactly this reason?

Singing from the same hymn sheet.

[paul_b]

a good link that, and one that backs up what i originally stated, which is that there is no requirement to show x amount of money in a bank account at “all” times.

quote “that assumes income is exceeding expenditure”
if it’s not your doing something drastically wrong or simply working for nothing!

quote “if everything in the garden is rosie why do people go bust?”
because people that have never been self employed suffer from delusions of grandeur with a misguided idea that being your own boss means you don’t have to graft for your money, they don’t go out and buy an old wagon and build the job up with what they earn, they go and take on crazy amounts of finance and buy three or four new wagons thinking they’re going to sit back and watch the money roll in like they’ve hit the big time, even though to keep those wagons busy they’ve took on work that can’t possibly give them any profit! and even when they run at a lose for a month they don’t do anything about it because they believe that the next is going to turn things round!

quote “the key word here is contract”
correct and the firm i sub off hold the contract hence the term sub-contract! a confirmation note be it for a week or a month is in effect a contract between me and my customer where they are agreeing they owe me x amount of money for work done and as such will carry far more financial clout than any loan or overdraft facility.

so basically at the end of the day, if you set up and do everything legit and actually run at a profit you never have to worry about keeping x amount of money sat in the bank.
of coarse if you don’t run at a profit, your either in the wrong game or doing the wrong work.

quote"why is mr stobart struggling so much to hold onto his license"
i personally wouldn’t dream of making comments on why someones having problems with their business unless i was party to the full facts, and perhaps no one else should either?

[wheel_nut]

quote"why is mr stobart struggling so much to hold onto his license"
i personally wouldn’t dream of making comments on why someones having problems with their business unless i was party to the full facts, and perhaps no one else should either?

This is in the public domain, there is nothing secret about it, all the trade press and business pages have been reporting it,

Maybe if we bury our heads in the sand it will go away

[paul_b]

so the top man himself has put out a press statement as what the problems are, or is it just another case of every man and his dog thinking he’s in a position to pass comment and make judgement based on hearsay and superstition?
to many back stabbers and free loaders in this game, in my opinion.

[wheel_nut]

Paul,
If and when you are called to a public enquiry, there is certain detailed financial information that is withheld, this case has been well documented and the current structure of the company does not meet the financial requirements of the TC.

In my opinion the unelected TC have too much power, but till that is changed the financial requirements remain the same for you, me and for a high profile company like Stobart.

I doubt this is the last case you will see like this, as the TC’s will have a precedent to work with and will continue to look into the finances of these large multinationals

[big_joe]

The other option is to arrange an overdraft facility with a bank to cover the start up financial requirment, you don’t have to use it, but the bank will charge an annual arrangement fee to keep it activated.

[spaceman]

Big Joe:
The other option is to arrange an overdraft facility with a bank to cover the start up financial requirment, you don’t have to use it, but the bank will charge an annual arrangement fee to keep it activated.

Big Joe - yup, overdrafts are accepted. But note the financial requirement is not just for start up - it applies throughout the life of the licence.

[spaceman]

quote “the key word here is contract”
correct and the firm i sub off hold the contract hence the term sub-contract! a confirmation note be it for a week or a month is in effect a contract between me and my customer where they are agreeing they owe me x amount of money for work done and as such will carry far more financial clout than any loan or overdraft facility

Practically everthing bought and sold is a contract - offer, acceptance and consideration etc etc. A Purchase Order “be it for a week or a month” is likely to have less, if any, “financial clout” than liquid funds, such as cash in the bank, credit card or overdraft!

so basically at the end of the day, if you set up and do everything legit and actually run at a profit you never have to worry about keeping x amount of money sat in the bank.

You have to continually meet the financial requirement (including any margin vehicles) on average in any rolling three month period!

It has nothing to do with your P&L account. For the majority of operators, they might ask for the Balance Sheet IF the required standard cannot be proved from bank accounts, credit card statements etc.

Your interpretation significantly differs with mine, David Lowe’s and a few others on this forum.