What to Do If Your Business Is in Financial Trouble (A Guide for Transport Operators)

Running a small transport operation is tough. Fuel costs go up, payments come in late, vehicles break down — and suddenly you're facing a cash crisis.

For Licence holders, financial problems aren’t just a business issue — they’re a compliance risk. If you can’t prove financial standing, maintain your vehicles, or pay your bills, your Operator Licence is at stake.

But don’t panic — and don’t bury your head in the sand. This guide will help you:

• Recognise the early signs of financial distress

• Understand the compliance consequences

• Take immediate, practical steps

• Know when and how to speak to the Traffic Commissioner

• Plan your way back to stability

Whether you’re a sole trader or running a small fleet, here’s how to deal with financial difficulty — the right way.

🚩 Spot the Warning Signs Early

Some operators only act when the bailiffs knock — but by then, it may be too late.

Common early warning signs include:

Symptom	Meaning
Overdraft permanently maxed	No cash buffer left
Avoiding or delaying vehicle maintenance	Compliance red flag
Missing HMRC or VAT deadlines	Legal and reputational risk
Regularly paying bills late	Damages supplier trust
Ignoring letters from DVSA or creditors	Problem is escalating
Avoiding opening post or checking bank accounts	Classic sign of financial stress

The sooner you act, the more options you have.

📉 Understand the Compliance Consequences

When your business is in financial trouble, your Operator Licence is automatically at risk — even if you're not trying to break the rules.

Here’s how:

Issue	Compliance Impact
Inability to prove financial standing	Grounds for licence suspension or revocation
Skipped maintenance to save money	Increased chance of DVSA prohibitions
Letting insurance or MOT lapse	Immediate breach of licence undertakings
Missing staff or driver payments	Staff attrition and reputational damage
Not responding to Traffic Commissioner correspondence	Likely escalation to Public Inquiry

Remember: the Traffic Commissioner doesn’t expect you to be wealthy — but they do expect you to be in control.

✅ Step-by-Step: What to Do if You’re Struggling

1. Check Your Financial Standing Immediately

Use your bank statements to calculate your accessible cash. As a reminder:

• £3,100 for your first vehicle

• £1,700 for each additional one

If you’re below this, you're non-compliant — and must act.

📌 Tip: Don’t wait to be asked. Take action now, not when DVSA comes knocking.

2. Review All Spending — Ruthlessly

Cut non-essential spending immediately. Ask:

• Do I need all my vehicles on the licence?

• Can I pause or scale down operations temporarily?

• Can I delay new purchases or expansions?

• Are there cheaper alternatives for suppliers, fuel, or services?

This is not the time to gamble on risky growth — stabilise first.

3. Catch Up on Maintenance & Paperwork

If you’ve delayed PMIs, MOTs or inspections:

• Book them immediately

• Document everything

• File copies in your compliance file

Neglected maintenance = dangerous vehicles = immediate prohibition.

Even if you can’t fix everything today, showing you’ve taken action is critical.

4. Speak to Suppliers, Insurers, and HMRC

Don’t hide — communicate.

• Suppliers: Request payment terms, freeze accounts, or pause services

• Insurance provider: Ask about payment holidays or reduced cover

• HMRC: Set up a Time to Pay arrangement (they’re used to it)

Being proactive builds trust. Ignoring them builds pressure.

5. Speak to Your Accountant or Financial Adviser

Even a short 1-hour session can:

• Help you build a recovery plan

• Adjust your cash flow forecast

• Restructure debt or overheads

• Identify where your profits are leaking

If you don’t have an accountant, contact a local business support service or use free online resources (like the Business Debtline).

6. Decide If You Need to Notify the Traffic Commissioner

You're required to notify the Office of the Traffic Commissioner if your ability to meet licence conditions is affected, including:

• Financial standing shortfalls

• Loss of operating centre

• Insurance lapses

• Major operational changes

Don’t wait until you’re found out.

Example Notification Letter:

Re: Financial Standing – Restricted Licence ABC1234Dear Office of the Traffic Commissioner,I am writing to inform you that our available cash balance has recently fallen below the financial standing threshold for our 2 authorised vehicles. This is due to delayed customer payments and increased costs.We have taken the following actions:Paused use of one vehicleArranged emergency finance to restore our balanceReviewed our spending and improved credit controlWe expect to restore financial standing within 2 weeks and will provide updated evidence.Please find attached our current bank statement and plan.Yours sincerely,John SmithDirector, JS Transport Ltd

Being upfront shows professionalism and good repute — key qualities the TC considers.

🛠️ Optional: Seek External Finance (Cautiously)

If your business is viable but struggling short-term, finance might help.

Options include:

• Overdraft extensions

• Bounce-back loans or recovery loans (if available)

• Director’s loan (from personal funds)

• Asset finance or sale-and-leaseback

• Invoice factoring (to unlock slow payments)

⚠️ Warning: Do not take on debt unless you have a plan to repay it. Debt without income = deeper hole.

🧠 Final Thoughts

Financial trouble doesn’t make you a bad operator — but ignoring it does.

Your responsibilities as a Restricted Licence holder continue even when money is tight.

The DVSA and Traffic Commissioner want to see that you’re managing the problem, not hiding from it.

So if you’re struggling:

• Acknowledge it early

• Cut costs and plan repairs

• Keep records and communicate

• Stay honest — especially with the OTC

You can recover. But only if you stay on the front foot.

Next in the series:👉 How to Set Up Your Books for Operator Licence Compliance