PROBLEMS OF THE HAULIER AND CARRIER.
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The Importance and Value of Keeping Cost Records—How the Bank can be Used to give Material Help in Connection with Business Accounts.
THE New Year is fast approaching, and many users of commercial motors make December 31st the end of their financial year. This prompts me to appeal to those Who do not keep vehicle cost records to do so in future. It is not that a fiendish delight is taken by me or anyone else in thinking of hauliers and carriers burning the midnight oil while working out strings of figures. The idea that record-keeping involves hours of hard labour is entirely wrong. When the routine is properly organized, even the slowest worker can do all that is necessary for a week's simple accounting for one vehicle in about an hour.
Surely an hour a week is worth spending if you can save money by doing so! In many cases the saving effected by that hour is far more than the profit earned in one hour's working of the vehicle. The whole point of keeping records is that you can prevent waste, reduce unnecessary expenditure, and increase profits by keeping an eye on the outgoings. Unless you have data of costs for various periods, how can you tell that overhaul and maintenance expenses, for instance, for one vehicle are not out of proportion tO the amount of work which it has done? Comparisons between types or makes cannot be made with great accuracy in the -absence of accounts, and there is scope for much leakage due to such causes as dishonest employees, forgotten accounts, and so forth.
Essential Records of Receipts and Expenses.
The human memory cannot keep a check on every detail for months and years past, but a simple set of accounts can tell you everything within reason; and that without the use of mathematics more complicated than those possessed by the average schoolboy of 12 years of age. So long as one can add, subtract, multiply and divide money, all the " accountancy " of the haulier or carrier in a small way of business can be done, and that quite quickly. A knowledge of decimals or fractions is not essential, but it certainly helps towards getting more accurate results.
Banking morrey is not only a safeguard, but much of the checking of accounts is done for you by the bank staff. There are very few men who cannot reach a branch of a bank at least once a week. Granted that a haulier or carrier has an account at a bank, it is very desirable that he should keep his business and private accounts entirely separate. It is quite easy to have two accounts in the same branch—one in the business name, the other, of course, in that of the individual. In cases where the business is run in the owner's name, the accounts can be known as No. 1 and No. 2 in order to avoid confusion. To mix personal and business money is hopeless; in such circumstances it is impossible to know whether any shortage which the bank pass-book may reveal is due to business leakages or to one's own private extravagance, and the ability to check payments of the proprietor's salary is lost to a large extent when only one account is used.
There are many who still do not make use of the wonderful banking organizations which exist, and use their trouser pockets instead. As an instance of the folly of "trousers pocket" finance, let us picture a small haulier going about his day's work. Leaving for work first thing, he gives his wife, say, £3 for house keeping accounts; on the way to the garage he collects £1 10s. from a customer, and into his pocket goes the money ; when he gets to the garage a driver is going away for a night and wants some money advanced for expenses; say 10s, change hands. During the next two hours a few shillings come in from a customer for a small haulage job, and many shillings and pence go out in the purchase of the hundred and one odd items
which are required in a commercial garage. After dinner our .hero goes away for a two-day job with one of his vehicles, and the finances of the business go with him.
After the trip the odds are that he could not account for all the money which lies passed through his hands or give details of the various transactions ; he will inevitably be ,several shillings .out in his calculations unless he has kept an accurate record in black and white. It is much better to use the. bank and keep a \petty-cash book for small disbursements, and there need then be no uncertainty or doubt as to any moneys passing through the hands of those responsible for the concerti.
The Purpose of the Bank Books.
Taking the books generally used between a bank and its clients, we come first to the credit or " pay-in " book. A sufficient explanation should be given on each counterfoil of the " pay-in " book to tell you what the items are if, at a later date, you have to refer to them. It is no good making such an entry as "A.J.1 £10 " ; something after this style is infinitely preferable: "10.1.26. A. Jones, job No. 12 (or account No. 9), dated 1.1.26, 110." Armed with this information you can, if circumstances demand it, trace exactly whose money was paid in, which job he paid for, and the date of the account settled.
Initials are not good enough ; there might be, for instance, Arthur. Jones and Andrew Johnson, both on the books and both owing £10. In addition, one of them might owe two lots of £10 for two jobs, and mistakes could easily arise as to whether one or both accounts were paid, particularly when a proper cash-book is not kept by the concern. Too much information in the " pay-in " book is almost impossible, and adequate details prove a help for checking one's own account books. This point should not be forgotten by hauliers whose businesses are limited companies, as the auditors find these counterfoils of great assistance to them when verifying the annual accounts.
In the case of cheque-books the necessity for ample data again applieS. Counterfoils are quite big enough to contain a lot of information ; an entry such as " Smith, £5," is of no practical use a few weeks after it has been made; such details as follows :-10.1.26, J. Smith and Sons, account No. 77, dated 1.1.20. Repairs and spares, 15," can easily be got into the space available, and from these particulars you can gather that full details will be found in the receipts filed under "maintenance," being to do with work on a vehicle, which receipt to look at, up to what date Smith and Sons' account was settled, also the date on which it was settled.
The pass-book is simply a record of money going into and out of the bank ; it is kept up to date by the bank staff, and should be handed in every month for completion in order that the haulier or carrier may obtain accurate information for working out his approximate monthly balance-sheet. It is advisable to make such a balance regularly in order that the state of affairs may be checked and loss may be prevented before the injury has gone too -far_ When the book is received from the bank the entries should be checked by the counterfoils in the " pay-in " and cheque-books. When doing this, see that all cheque-books which have been supplied during the period and are charged for usually as " stamps " are in order ;. in other words, have you had the cheque-books and is their value charged to your account that of the book or books actually received? Do not throw away the counterfoils--; keep them for several, years, as they cannot be replaced, and any question which may arise with regard to accounts, the failure of other business concerns and so forth may be elucidated by having these little slips, to which reference can be made.
Having dealt briefly with bank-books, we come to the method of using the bank. All cheques received from customers should be paid in, also cash. There is a temptation to keep actual notes and coins for use as petty cash, but if this is allowed to take place it will confuse the books, unless there is a regular man devoting his time to book-keeping. The trouble will be that the bank will not show the. incoming cash which is pocketed by the owner ; therefore there is bound to he a discrepancy between the pass-book and the concern's cash-book. If no cash-book is kept, of course, the passbook fails to show a true record, and one of the objects of banking is defeated. The most simple rule is to pay in everything you get, whether in cheques, cash, notes or postal orders, and draw out money by cash cheques as and when required. In this way the bank pass-book will tally easily with the haulier's cash-book; providing a valuable check, or the pass-boOk alone will function as a type of cash-book,
Cash withdrawn to meet small odds and ends, commonly called petty cash, is shown in the cash-book in bulk, but not in detail. Thus, "Cash, £5," tells you how much was withdrawn, and the date is given, but it does not say how the money was spent. For this purpose a simple petty cash-book should be kept to prevent losing track of the money withdrawn. It is quite easy to get drivers' signatures to chits for money given out as petty cash, and a record should be made of all small purchases under their propel% headings, in order that the items which form such a large part of the overhead expenses of every job may be properly sectionized.
Many accounts of even a few pounds are paid out of the cash-box, and, unless a book is used, proper costs cannot be debited against each vehicle. For instance, a vehicle away from its home garage for a couple of days will have to be housed elsewhere; probably its oil lamps require refilling, two or three gallons of fuel have to be bought by the driver, and in this way a sum of 15s. may be spent ; unless the owner or manager has a black-and-white record of the sum of 15s. it will not find its way into the expenses of the job in question, and when sending in his account to his customer the haulier is most likely to overlook the expenditure and he wilt be the poorer to that extent. Gotton-waste, paraffin and sundries of this nature form quite a formidable total in a year, and nobody can expect to be able to say at the end of tile month what he has spent on them unless a proper account is kept.
In another week's " problem " I hope to deal with the subject of simple division of expenditure into sections and the method of using the pass-book to obtain a monthly balance-sheet. An important point must be borne in mind, namely, that the balance in hand shown by the pass-book is not strictly available for division as profits, and the sum shown as the difference between income and expenditure is not a balance in the true sense of the word. Much of it has to be allocated to various standing charges, such, for instance, as depreciation. The bank may hold £100, which has accrued in the course of, say, two months, but it must not be imagined that profit at the rate of £50 a month has been made. During those two months the. vehicles have worn out to a certain extent, and proper provision must be made for buying replacement vehicles, otherwise the stock-in-trade of the business is being allowed to run
itself to death. S.T.R.