Financial Standing Rates for Operators – unchanged in 2020
Recap – The law requires that all applicants or holders of an HGV Operator’s Licence have enough financial standing to ensure that they can properly finance their operation and maintain their vehicles in a fit and roadworthy condition.
This law is upheld by the Traffic Commissioners.
2020 – Financial Standing Required Remains Unchanged
In January 2020 just past, the TC’s confirmed that the levels for 2020 will remain unchanged at £8,000 for the 1st vehicle and £4,450 for every subsequent vehicle you request to be authorised. Remember, this total figure must cover every vehicle you request to be authorised, and not just your current stock.
If you request for 3 vehicles to be authorised, you need to demonstrate financial standing of:
1 x £8,000
2 x £4,450
Total = £16,900.
Financial standing means “readily available” funds such as bank balance (cash available), overdraft facility and credit cards.
For new applicants, the licence application form will not even get past the first stage unless financial standing can be evidenced and therefore financial standing is essential for a haulage business from day one.
If the Traffic Commissioner requests information or orders a Public Inquiry provide all relevant documentation as quickly and as accurately as possible. If the operator does not meet its financial standing requirements, then co-operation by the operator will make it much more likely the Traffic Commissioner will allow a period of grace to rectify the situation.
In other words, comply quickly and accurately and you’re more likely be given more time!
Whilst you will be stopped from operating immediately with no, or an incorrect, HGV Insurance policy, it is also important you comply with these regulations.
Financial standing – some tips:
- Calculate the required financial standing amount by multiplying current levels by the number of vehicles you are authorised to operate. Remember that the financial standing figures are reviewed every year. Make sure you check the requirements each year as they can and do change
- Keep a check on your financial standing. Diarise to do a regular “stock take” of your finances to ensure that you are maintaining required levels. Don’t get caught out.
- Consider increasing your credit facilities – but don’t get tempted to use them unnecessarily.
Often agreeing an increased overdraft facility with your bank is the simplest way of increasing your financial standing. If your financial standing is looking tight, then making arrangements with your bank to increase your overdraft can help the situation. Don’t be tempted to use the increased overdraft facility just because it’s there. This won’t improve your cash-flow nor your financial standing.