New research published by Creditsafe reveals that a third (33%) of commercial vehicle leasing companies have experienced customers attempting to renegotiate the terms of their original leasing agreements in the last 12 months.
On average one-in-six (15%) customers of the affected leasing firms wanted to renegotiate their original contracts.
As a result of this industry-wide trend, leasing firms across the country are being forced to re-evaluate their forecasts and in some cases drastically downgrade predicted revenues.
In the last 12 months alone 33% of companies specialising in commercial vehicle leasing have seen an increase in late or defaulted payments from customers.
Creditsafe says 16% of commercial vehicle leasing firms have lost money as a result of customers becoming insolvent in the last 12 months and exposure to trade debtors has increased by an average of 7% over the last year.
In some cases, it reports commercial vehicle leasing agencies are failing to take even basic precautions to mitigate the risk of signing contracts with firms at risk of entering insolvency.
Almost a fifth (17%) of companies operating in this market do not always run credit checks on prospective and existing customers to monitor their financial health.
David Knowles, business development director at Creditsafe, said: “With transportation costs increasing dramatically while the economy remains stagnant many firms leasing vehicles are being forced into renegotiating their contracts in a desperate attempt to cut costs.
"Technical innovation has also left many firms questioning whether sales and support teams that traditionally spent significant time on the road need to rely on face-to-face interactions to close deals.”
Knowles continued: “It is vital for companies in all industries not only to vet new clients to establish their creditworthiness, but to regularly review the financial health of existing clients.
"Particularly in industries where customers sign multi-year contracts, where payment is not made entirely upfront, firms can be left extremely vulnerable if there is default on the contract midway through its term.
"Using credit referencing solutions firms can ensure they forecast with greater accuracy and if necessary proactively seek to change the terms of a customer’s leasing agreement if it appears they are in financial difficulties and there are genuine concerns that the firm may default in the near future.”
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