Couriers in Debt: Small Courier Companies Struggle to Survive in the Face of Rising Arrears

TSLCouriers in Debt: Small Courier Companies Struggle to Survive in the Face of Rising Arrears

Couriers Have Their Hands Full. Although the value of individual online purchases is decreasing as customers seek cheaper alternatives to goods, the number of transactions is increasing. The market is dominated by large players with extensive networks, but it is supplemented by a large number of small companies that act as subcontractors. According to the latest data from the National Debt Register (KRD), couriers have 40.7 million PLN in outstanding debts. The smallest companies bear the greatest burden. These are the ones that must ensure financial liquidity by not delaying in recovering debts from their debtors.

The latest available data from the business information agency Dun & Bradstreet shows that at the end of 2023, there were 8,600 courier companies operating in Poland. Over the course of the year, 600 new companies were established, an 8% increase. Looking further back, over the past five years, their number has grown by 52%. These are mainly sole proprietorships. The rapid development of this industry is driven by the enormous demand for courier services, fueled by the increasing online sales. This is where couriers receive most of their orders and profits. This year, a clear trend has emerged in the market: customers are looking for cheaper alternatives to more expensive goods. Chinese shopping platforms are gaining popularity. Poles are buying more for less, which translates into an increase in orders for the delivery of purchased products.

The Courier Race: Small Players Fall Behind

The KEP market (courier, express, and parcel services) is often seen through the lens of the largest companies, which have built strong recognition. However, the majority of the industry consists of micro-scale entities. Sole proprietorships face the most financial difficulties. Their business model is based on purchasing or leasing a delivery vehicle and entering into a B2B contract with a larger courier company to deliver packages to customers on its behalf. This solution is especially popular among those just starting out in the industry. However, they do not always correctly calculate the costs of running their business, which include vehicle loan payments, fuel, service, repairs, part replacements (e.g., tires), and vehicle insurance. Additionally, they must pay ZUS contributions, income taxes, and accounting fees. If the parent company does not provide scanning devices, work clothing, packaging and transport equipment, a mobile phone, or navigation, the costs rise even further. On top of this, the intense market pressure forces low service margins. The industry is supplemented by individuals running pickup and drop-off points as part of franchise agreements with large companies. Sole proprietorships’ budgets are often unable to bear the costs associated with running the business.

This is evident in the data from KRD. Of the entire debt of the courier industry, which amounts to 40.7 million PLN, 72% are unpaid liabilities of sole proprietorships, which owe 29.3 million PLN. Commercial law companies, i.e., large firms, should pay 11.4 million PLN. The total number of debtors in the sector is 1,325, with 1,003 being the smallest entities. The average debt in the industry is 30,700 PLN, while for sole proprietorships, it is 29,200 PLN.

“Since January of this year, the debt of the courier industry has increased by 5.6 million PLN. Last year alone, 645 courier companies suspended their operations, compared to 490 the year before. These are mainly the smallest entities. As our data shows, they are responsible for nearly three-quarters of the industry’s debt. Low margins, market pressure, and rising operating costs are causing more and more sole proprietorships to be unable to meet their obligations. The smallest companies lack financial backing, and without it, it’s difficult to stay afloat when a rough patch comes along,” explains Adam Łącki, President of the Management Board of the National Debt Register (KRD) Economic Information Bureau.

Package on Credit

To start their businesses, sole proprietorships usually rely on external financing to purchase vehicles. Two-thirds of the debt burdening couriers, amounting to 27 million PLN, consists of unpaid loan and lease installments. Half of this amount was recorded in the KRD by original creditors, and the rest by securitization funds that purchased the debts.

“The debt of sole proprietorships to banks and leasing companies stems from the fact that they do not have regular income, so they are not always able to meet their obligations on time. The number and value of orders for the smallest couriers vary depending on market demand, which is also affected by seasonality. There is more work around free shipping days in November or Christmas. After that, there is a slower period, revenues are significantly lower, which disrupts the financial liquidity of the smallest entities. As a result, they lose the ability to meet their obligations, and their creditors, in an effort to recover the money, take the cases to debt collection,” explains Jakub Kostecki, President of the Management Board of debt collection company Kaczmarski Inkasso.

Problems with paying installments often end with banks, unable to recover the money from customers, selling the debts to securitization funds. Couriers owe debt management companies a total of 13.5 million PLN. In addition, they owe 2.6 million PLN to insurance companies and 2.5 million PLN in mutual debts within the industry, such as when one delivery company has not paid another. Another 1.8 million PLN is owed to mobile operators, internet providers, and TV services.

The largest parcel delivery market is in Mazovia, and this is where debts are the highest. The debts of couriers operating in this province make up almost a quarter of the total amount listed in the KRD, amounting to 10.2 million PLN. In Silesia, debts reach 4.2 million PLN, and in the Lower Silesian Voivodeship, 4 million PLN.

Millions Frozen with Clients

Couriers themselves are struggling with debtors—they are owed 34 million PLN by their clients. Primarily, retail companies owe them for services, accumulating 18.4 million PLN in unpaid invoices. Transport and warehousing companies owe 4.5 million PLN, while industrial enterprises owe 4 million PLN.

Each unpaid invoice represents a real loss for an entrepreneur. If they are waiting for payment on just four sales invoices, each for 1,000 PLN, that adds up to 4,000 PLN. For a sole proprietorship, the lack of this sum is significant, as it prevents covering current obligations such as fuel or taxes. Sole proprietorships typically do not have financial reserves for unexpected situations and have nowhere to turn for money. Therefore, the smallest entrepreneurs should not delay in pursuing payments from their contractors. Taking on more unpaid orders only deepens their financial hole.

“According to the survey ‘Entrepreneurs and Their Debtors,’ which we conducted in July on micro, small, and medium-sized enterprises, 17% of them believe that only larger debts, e.g., over 10,000 PLN, should be submitted for debt collection. This is not true—there are no limits here, so small entrepreneurs should not wait passively. The market offers opportunities for amicably resolving the issue and restoring funds to the company’s account. Taking advantage of these opportunities is in the interest of entrepreneurs themselves. As KRD data shows, the amount clients owe couriers is only slightly less than their own debts. Our survey showed that one in four companies refers overdue invoices to debt collection only six months after the payment deadline has passed. Usually, this is too late to recover the money without problems,” concludes Jakub Kostecki.

Source: https://managerplus.pl/kurierzy-w-dlugach-male-firmy-kurierskie-walcza-o-przetrwanie-w-obliczu-rosnacych-zaleglosci-23980

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