HELP FOR HAULIERS.
Page 11
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Methods of Accounting the Running Costs and Standing Charges. The Correct Classification of Certain Outgoings.
THE tables of running costs which appear from time to time in these columns serve a double purpose. They are of most use to the intending haulier, who has no experience of the financial side of the business, as they show him, approximately, what the expense of his business is likely to be, so that, having, a knowledge of the rates which are obtainable for contracts in his neighbourhood, he may judge for himself as to the likelihood of his being able to make a living out of the proposed occupation. They are also of use to the man who has actually started in the business but -who has not had sufficient experience to 'be able to estimate for himself the incl.dene,e of certain items of the running cost of his machines. I refer to the cost of tyres, of maintenance, and of depreciation.
In addition, they are of value in lesser degree in other directions. They serve as a check upon the costs of established businesses, for any vehicle which in normal circumstances of use is costing more to operate than the amounts which are set out in those tables should immediately be made the subject of urgent inquiry, in connection with which the services of the writer are at the disposal of the reader who feels himself unable to cope with the matter himself. That the cost of running any vehicle should be under the figures given in the table is not necessarily matter for self-cofigratulation on the part of the owner. The figures given are on the high side throughout, being purposely so given, in order to avoid setting up a standard which might be too difficult of attainment as a commercial proposition. ,
They are, however, most important of all in that they serve as a basis upon which a serious system of book-keeping may be founded. To their fuller employment to that end, the logsheets were designed and published. The logsheets themselves are the thin end of a wedge, which I desire to force in amongst the body of hauliers who are regular readers 'of this page, and who do me the _honour, from time to time, of corresponding with me on matters of interest to themselves and their confreres. It is hoped that, by their use, the haulier will, almost unconsciously, be persuaded to get into the habit of keeping his own records, and, ultimately, into the way of keeping a proper set of books. In order that our ultimate object may be achieved, the logsheeti must be supplemented by other sheets, on which other items 0 expense may be entered in due, sequence and at the proper .time. It is to be noted, for example, that the logsheets themselves only offer facilities for the recording of items which vary every day. They do not even form a complete record of the running cost of a lorry, which cost, as all my readers are well :aware, is but half the operiting cost of a Motor
vehicle. .
In the issue of The Commercial Motor, dated January • 10th,' there appeared, on page 739, an article descriptive of a system of accountancy for use in' bonneetion with motor transport. The system was excellent in its way, and. the account books, 'which are, so far as I am aware, the only ones on the market which are of any real value, are certainly well worth the modest amount which is charged for them. The method of accounting too, although suffering, according to my ideas, from certain defects, to which I will refer in a moment, will meet the requirements of a good many hauliers. The very i least to be said for it s that it is most complete and that, if conscientiously carried out and completed, it will afford the haulier' at the end of the year, a fairly accurate idea as to how he stands, and in, what direction any economies may be effected. These, after all, are the two most important of those things which he wishes to know.
In considering a method of account keeping for inclusion in such a series of articles as this, however, it is necessary to have in mind the wide interests of those to whom these articles are directed, and so to frame the books as to meet the requirements of the greatest possible number. If this is to be done, the first essential, as I have always found, is to arrange matters so that it is possible easily to pick out the operating cost of the vehicle alone, as distinct from
that of the business itself. This is the principal criticism which I have to offer on the system which was described the other week. The standing charges, according to that system, for example, are those of the office and administration, as well as those of the vehicle. In my opinion, the two should be separate and distinct. The items given (see page 7409, include: Interest on capital expenditure, which 'appears to be meant to cover capital sunk on office furniture and equipment, as well as that on the lorry itself and its accessories. Depreciation—concerning which I have a special criticism—would also appear to be reckoned on things other than the vehicle. The same remark would apply to the item "insurance." Administration and advertising are clearly items which are not affected by the running of the vehicle, while Jam not clear as to the necessity for separating the charges for "cleaning" and "garage."
Depreciation of a motor vehicle! I have always maintained, should be considered in regard to the mileage, covered, being, in point; of fact, a running cost. The depreciation of a commercial motor differs from that of a: touring car in that it is not affected by changes 'offashion, or at 'least not to an appreciable Extent. It might be said, therefore, that the depreciation of -a lorry which stays in the garage is pr'actically nil,' being dependent on the mileage;
. hence my inclusion of this item in the running costs instead of in the standing charges. It is surely true that a machine which travels 12,000 miles per annum has suffered more than one which has only travelled 1,200.
The need for a tyre register is fairly obvious ; I have indicated it frequently in what I 'have written in these articles. The method, advocated in the system to which I am referring, of crediting or debiting the vehicle with anything which may have been saved or lost on that item, as compared with the actual amounts debited to it per mile, is certainly ingenious... should suggest that to correct the 'figure for the ensuing year would be very useful, from our point of view. Next week I. propose to outline a sheet for recording more of the operating costs of a vehicle. THE SKOTCH. B15