HINTS FOR HAULIERS.
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Operating Costs are of Value to All Users. The Haulier has Other and Special Expenditure to Consider.
IN MY last article I concluded the discussion of operating costs. Those -who follow the methods I outlined should now have no difficulty in ascertaining the expense of working their motor vehicles per mile, per hour, or per day. Such knowledge is essential to every reader of this paper, though all of them do not have to view the matter from the same very serious standpoint as does the haulage contractor.
I know that rapacity for knowledge of this kind is not inherent in every user of commercial vehicles, many of whom—groeers, butchers, dry-goods merchants and the likee-haNe the idea that, so long as the machine runs and keeps their goods on the move fairly well to time, nothing more need be asked.
The Moral Effect of Cost Checking.
In so thinking they are wrong, for it is really most important that every owner of a commercial motor should keep track of his costs, making records periodically and checking each new statement with the previous one, as -well as with those of other people whenever he has access to them, such as is afforded from time to time in this journal. He needs this knowledge so that he may prevent waste, and even theft. Many a user has found that a mere investigation of the working of his vehicle has suddenly and mysteriously improved its petrol consumption by several miles per gallon and reduced its lubricating oil consumption by. a like percentage. The owner should keep these records of costs, because, other things being equal, any increase in this expenditure is more than likely to be an indication that something is -wrong with the chassis itself. Other reasons than these will occur to the thoughtful and intelligent user.
The haulier, of course, must know ins costs before he can rightly estimate his proper charges. Ile has really nei option but to keep careful track of his expenditure on the lorry. Unfortunately for him, there are other items of expense which he must take into consideration before he can know what his hire charges must be if he must make a profit. I have already referred,. in passing, to certain expenses which have to be met and which cannot fairly be charged against the lorry itself. Such expenditure I designated as "establishment or overhead charges." I stated, for example, that the wages of the driver's mate on a petrol lorry Or those of the conductor on a 'bus or motor coach were chargeable in that way.
Splitting Up Establishment Charges.
I also, in an article which appeared on May 1st (page :137), quoted from a paper read by Mr. C. le M. Oroseelin, managing director of H. Viney and Co., Ltd., reproducing from that paper a kind of a genealogical tree of cost on which the workbag costs of that company's lorries, and the establishment charges in connection with its business as haulage contracfors were duly and properly separated. The items included under the heading of establishment charges were divided under two heads, "Impersonal Ledger" and ," Private Ledger." Under the former wereincluded rent and rates, telephone, insurance, lighting, maintenance and upkeep of garages and office, travelling expenses, legal and accountancy charges, income tax. Under the latter management salaries, bank charges, directors' fees, depreciation. Now, these articles are not written for the benefit of such firras as H. Viney. and Co., LH., -who may be presumed to be in a position to employ accountants with a capacity for keeping :proper records of all the costs involved by the -carrying on of the company's business. They are intended to interest and, so far as possible, to help the small haulier, whose chief asset is his knowledge of motor-lorry driving and maintenance, and who has chosen motor haulage as being, for him, the most congenial way of earning a living. His knowledge of business methods, and particularly the financial side of them, is generally extremely vague, so much so that the majority of -them are not in a position, without some guidance, to appreciate, to the full extent, the importance of ascertaining the complete operating costs of their vehicle.
That there should be vehicle.expenses to keep in mind, such as those enumerated above, will be entirely beyond the comprehension of a good many small hauliers. Even the more experienced will be inclined to the opinion that no more than one or two of the above items ever occur in connection with their own business, in which opinion they are seriously and grievously a rang. With the possible exception of directors fees, every item in the above list should be represented on the loalanae sheet of the smallest haulage-contracting business. We do not actually need to split our schedule of restablishment charges and label them " impersonal " and "private." All our book-keeping wili be completed in the one ledger, which may be labelled impersonal " or "private," according to the taste of the individual. Item by item the haulier's establishment expenses, compared with the list above, will be as follow :— Rent and rates.--This, of course, has nothing to do with the rent of his garage for the vehicle, which item is already included in the vehicle-operating costs. It refers to the rest of his office, and if he does not actually possess an office but runs his business from his private house, then he should reckon a portion of the rent of his house as chargeable against his business. Not only is this necessary in order to enable him to arrive at a proper estimate of hire charges, but it is advisable in connection with his return of income for assessment for purposes of income tax. Telephone.—I am going to assume that no pro gressive haulier will attempt to carry en his business without a telephone. This item will, therefore, figure in his establishment costs as a matter of course.
Insurance—This will be a proportion of such fire, burglary, and other insurance as is effected on his office, on the staff that he may employ in that office, and on his house if he runs his business from there.
Lighting and heating are essential items. They are so obviously necessary that I do not think they call for extended consideration.
Maintenance and upkeep of garages and office also an item which is self-explanatory. It covers the cost of any repairs to buildings or furniture which may be necessary. I do not think any haulier will need to be reminded that thele are such things as travelling expanses in connection with his business. Any job which keeps him away from home for a night involves him in special expenditure, which he should set down under this head.
He will be a lucky man who can carry on a business for many years without in some small way being involved in legal expenditure, whilst I am sure it is to be hoped that every haulier reader of this page is making sufficient profit to make it incumbent upon him to find a column in which to record the amount he pays in income tax.
The item of management salaries is one about which there may be, in one-man-one-lorry businesses, a certain amount of doubt. I have alreaddy, in discussing operating costs, insisted that such a man should pay himself a driver's wage. A little later on I shall suggest that he pays himself a profit as well, so that in such cases it may not be necessary to include an item for management salary as part of his establishment charges. So soon, however, as he begins to employ drivers so soon will it be necessary for him to pay himself a salary as manager.
Bank charges will not amount to very much. They must, however, be recorded. Directors' fees, I have agreed, are unnecessary. Depreciation refers to buildings and office furniture, and, although an essential item in the balance-sheet, would not be a
very big one. THE SKOTCH.