Factoring Companies Guidebook
Running Money
Definition
Usually occurs in the International Haulage Business, where a driver, when abroad, may request funds from the debtor, to get back to the UK, or to cover such items as fuel, food or accommodation. While this occurs predominately in International Haulage, it may also arise in Domestic Haulage.
Concerns
There are two concerns here:-
The driver has not been provided with sufficient funds to cover all the expenses to complete the journey.
The debtor will likely seek to offset any 'running money' against the assigned debt.
Where this is a regular occurrence or accepted practice, particularly with large debtors, the potential offset may amount to considerable debt erosion.
Identification
Make enquiries with the Client as to whether this practice takes place within their business. Although it is considered unlikely, there may be a reference to the payment of such expenses in the Client's terms and conditions, which should be obtained.
Review the purchase ledger for any potential contra accounts.
Remittance advices should be reviewed for any deductions and the reasons clearly identified.
