The Reason fo eparate Books
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MANY readers have got ahead of me in following up the articles on simple book-keeping. They have started to ask questions before I have finished the series. Most of the inquiries are of sufficient interest to justify my giving them publicity in these columns. It is likely, in any caie, that the questions have occurred to many more readers than those who actually wrote.
First, there is no account book published embodying the 'system. I doubt if one will be published. There is, indeed, hardly any need for such a publication. I designed it with the intention of avoiding the expense of purchasing special account books. Any haulier should be able to make one up himself, using ordinary exercise books, cash ruled or, better still, loose-leaf books.
In 'case, however, it is thought to be worth while to have books printed, any local printer will make them up, to the instructions embodied in the articles, for a small sum.
The next inquiry is one which I expected. It concerns the necessity of keeping one book for each vehicle. One haulier thinks it might save time, trouble and expense if he were to enter the data relating to his three vehicles in the one book. They are, he says, all alike as to type and capacity, and he cannot see the need for going to the expense of keeping a separate book for .each. I have advised him. and I advise all readers, to adhere rigidly to my plan.
I think that it is most important that the haulier should have a separate check upon the cost of each individual vehicle, as only in that way can any excessive expenditure be traced. If, for example, this man with three vehicles lumps all his records of petrol used per day on one page without discrimination, and if he finds his consumption increasing, he has no direct means for ascertaining against which vehicle the extra debit should be charged. •
If my plan is followed and the consumption of each machine is recorded separately, the source of any extra expenditure can at once be located. It is then easy to take the necessary steps to find out why that particular vehicle is beginning to cost more and the appropriate remedy can be applied.
Figures II and III come next under fire. (They appeared in the second article, on October 7.) Those figures are really one and the same. Fig II is a blank form; Fig. In is an example showing how the form should be completed. This is in answer to an inquiry from a haulier who wanted to know if there was any difference between them.
Fig. I, which appeared in the issue of September 30 and was repeated on October 7, is to bc entered on the fly-leaf of the operating costs record book. Once completed it need not be altered throughout the life of the vehicle. Fig. II is to be repeated on each page of the operating costs record book and in its essentials is the same throughout.
Another reader wanted to know if he could start the system immediately or should he wait to the end of the n30
year? If he is keeping no records at all he should start at once. There is, for 'him, no time like the present. All that is needed is that he should record his speedometer reading next Sunday morning, entering the date on the first page and go right ahead. Everything afterwards will \refer back to that originating week, which can be, for the purpose of recording expenditure on that vehicle, the first week of its financial year.
In some cases the actual end of the haulier's financial year may be close at hand. Then it will be worth while to wait until that period is reached before commencing to operate this system. At present I do not desire to interfere with any existing method of recording costs. I make no claim of superiority for this system of mine. I put it forward chiefly for the assistance of those who are not keeping proper accounts; not so much even with a view to helping the individual as with the object of encouraging all hauliers to keep accounts. I am positive that it is only in that way that so much rate-cutting can be scotched. I do so in the belief that a great proportion of the cutting that is so rampant is not so • much due to deliberate intention as ignorance of total costs.
To those who are already keeping accounts I say: "Carry on." Do not let me interfere, making, however, this important reservation: They should examine their own cost systems and make sure that they are keeping strictly accurate and complete accounts of all their expenditure in every direction, also that they are not overlooking the fact that for some months after the purchase of a new vehicle the expenditure thereon is well below the-average.
The question of " chits for petrol and oil has also arisen, for a reader points out that I make no provision for that in the system. I admit it: I had taken it for granted that the least any haulier would do in the way of keeping accounts would be to keep some sort of track of his petrol and oil consumption. That, I thought, would be the obvious thing to do and concluded that all that was necessary for me to suggest in this system was that these records of the issue of 'petrol and oil should be transferred to the book.
Loaders and Mates
Another reader raises the question of wages of loaders and mates. He sees no provision for that anywhere in the system. The answer is that these should be set down in Fig. II opposite the entry of wages in the summary near the bottom of the page.
The double entry of accounts for maintenance has proved a puzzle to some readers. Why, I am asked, is a set figure for maintenance entertd in the operating costs record book and, in addition, particulars of actual expenditure written _ in a separate book?
The reason is partly explained in that the expenditure on a new vehicle is much less for the first few months than the average throughout the life of the vehicle.
An important reason for that state of affairs k that maintenance costs are, for the first year, in the case of some vehicles, almost negligible, but may jump after this period, if only for the fact that so little has been spent on upkeep during the first 12 months
There is no getting away from the fact that to keep any chassis in good trim it must be regularly serviced and overhauled, and periodically inspected. All these things cost money, so thai if a haulier's records of maintenance costs are unusually low, am at once suspicious that it has not been maintained in the way it should be. I feel, too, that one outcome
of an unusually low bill for maintenance will he a much bigger bill for repairs later on. Moreover, the sum total of that expenditure will be greater than it would have been had proper attention been paid to the need for servicing during the early days. • My point in all this, written in reply to several queries concerning maintenance, is that if only actual costs are recorded, for the first year especially, the haulier may be deluded into thinking that those actual costs are all that he needs to regard as essential factors in calculating his fair charges. In that way he could proceed for a year or more operating at rates which seem to show him a profit--to be disillusioned when the need for an overhaul or other expensive maintenance operation comes along, finding him, perhaps, short of the wherewithal to pay for it.
If maintenance were the only item which served as a pitfall in this way I might have been inclined not to stress the point so much. It is, however, not so. There are at least two others of corresponding importance. One is tyres and the other depreciation, and those items also appear regularly on each page of the operating costs record book, so that there can be no risk of the haulier's overlooking their eNistence and making mistakes.
Enter in Maintenance Book That brings me to another point raised by an inquirer. I have made no special mention of tyres. The answer is that I intend tyres, in this simplified system of costs recording, to be entered in the maintenance book. Any expenditure on tyres, in the way of covers, tubes and valves as well as repairs of any kind, should be entered in the maintenance book in such a manner that it can at any time be picked out from the other items. Tyre expenditure might, for example, be entered in red ink, at the bottom of each page or, perhaps, on the left-hand page of the book, leaving the other items to the right-hand page.
The figures for maintenance which appear on each page of the operating costs record book are based on averages. not necessarily averages calculated by the operator: indeed, the whole scheme is based on the assumption that the haulier for whom the system is designed has no data at all.
The averages are taken from "The Commercial Motor Tables of Operating Costs." They indicate what the owner may expect to have to spend on maintenance, mile by mile, throughout the life of the vehicle. For some time, with a new vehicle, there may be less actual expense, hut, later on, it is more than likely that the expenditure per mile will be in excess of the figures given.
The reason for keeping this figure 'in mind, rather than setting down actual expenditure is, as I cannot .too frequently explain, that without it the owner of a new vehicle may under-estimate his probable expenditure and thus be led to make.a corresponding mistake in his charges.
The weekly average figures are therefore a safeguard, but it is just as necessary to keep note of the actual expenditure and at the end of a year's use of the system, the totals of both sets of figures, assumed and actual, must be compared. If the actual is no more than the assumed, the vehicle must be debited accordingly and an average figure deduced. That figure can serve for the next year's average, any error being on the safe side. The operator should play for safetv.
Reckoning Tyre Wear The question of the average figure for tyres is not so involved. A year's working will probably be sufficient to indicate what tyre wear is likely to be, although even there a marginal allowance must be Iva& to account for the fact that as a .vehicle wears it loses a certain amount of wheel alignment which only a new set of kingpins, etc., can cure. Even that defect may go for a long while undetected and • will be reflected in the tyre cost during that period.
Another inquirer raises a point which is, perhaps, a Effie outside the scope of this article because it does not affect the method of keeping track of costs.
'He draws attention to the fact that in the Tables the driver's wage appeared as a standing charge. He thinks it ought to be a running cost. The answer is, of course, that although wages alter from week to week according to the amount of work'done, the item required for a publication of the nature of the Tables must have a firm basis. This can be achieved only if overtime is left out of consideration.
Actually, in this system of recording costs, the actual amount paid in wages is entered each week in the operating costs record book, so that it does not really matter whether it is regarded as a running cost or as a standing charge.