Accurate Costing is Vital
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WE often wonder what proportion of operators • of commercial motor vehicles of all types keeps in use an adequate costing system We are afraid that. in many cases, and particularly in connection with small fleets or single , vehicles, many users of both goods and, perhaps, to a less extent, passenger vehicles, do not trouble to pay much heed to anything other than rudimentary partichlars of their incomings and outgoings.
It may seem hard for a man who is fully engaged, perhaps in actual driving during the day and possibly with, a little cleaning or maintenance in the evening, to have to put on-his thinking cap and set himself 'the task of delving into figures. It is a different matter where fleets are reasonably large, and a clerk, or, perhaps, more than one, can be deputed to do this job either on a part-time or whole-time basis.
However, present and coming events in connection with nationalization and other matters, the settling of charges relating to haulage or the carriage of passengers for more or less official bodies, and, in fact, any work for which the operator finds it necessary to receive higher payment for which he may be required to submit some proof of need, should prove to him that he must know his costs and receipts almost to the last halfpenny.
Loss From Lack of Knowledge Failure to make out a good case on definite figures may also mean that clients will not be satisfied that such claims are justified, and result in the owners of the vehicles concerned running these either at a loss or for such a poor return that the service given is barely worth the trouble involved.
lt is quite insufficient for a vehicle owner merely, to consult his passbook (if he does not keep his money in his stocking or the equivalent), and feel satisfied that he has quite a nice little balance on the credit side. Much of that sum may be, and probably is, already virtually mortgaged for inevitable heavy expenditure in the future in connection with extensive overhauling, tyre repair and renewal and, finally, the replacement of the vehicle.
Some of what we have said on this point applies even more strongly to the purchaser of a new machine, for this is, unlikely to involve serious costs beyond those for ordinary running for a period depending upon the quality of the vehicle bought and the manner in which it is treated. Consequently, even if the user be running at rates or fares which, in the end, may prove far from remunerative, he may for many months find that his receipts are considerably above his expenses, and thus feel that he is in clover, only later—and perhaps too late—to awaken to the fact,that he has not paid sufficient attention to definite costs in the way of depreciation, tyre wear, maintenance of chassis and bodywork, taxation and other items which are automatically accruing during every mile that the vehicle has run, and some even if it remains in the garage.
Long Service to the Industry For many years, our costs expert, known throughout the industry by the initials, S.T R. (derived from " Scrutator," which nom-de-plume he first adopted but had to change because it was used by another writer) has been doing his utmost to educate, not only the haulier, but every class of user in the important subject of the correct costing of vehicles and of the businesses concerned with them. Periodically, we have also issued up-to-date tables of average operating costs, including reasonable charges where these are appropriate. More recently we have published a booklet, "Cost Recording Made Easy," which also includes details of a basic system of maintenance. That these have been greatly appreciated and have met a widefelt need has been proved over the years by the enormous amount of correspondence which they have produced and by the large sales of both which have resulted.
Yet, even to-day, we receive many inquiries on costing which indicate that the operators concerned —and some have been in the business for years— have never given sufficient consideration to this highly important subject. We are far from complaining about these inquiries—in fact, we welcome them—although it must be admitted that often the basic figures and details of operation given are so meagre that it is not possible to give an adequate answer until further particulars have been received. At the moment our tables of costs are being revised to meet various increases, chiefly in wages, and the new edition will not be available for about three months, whilst that current until now is out of stock.
It must be remembered in connection with possible taking-over under nationalization that authentic balance-sheets arc essential. Failure to place these before the officials concerned will undoubtedly result in the latter having to prepare their own assessments which are then not likely to be on the generous side. Even in the case of others who may not be affected in this way, the need may arise for well-based figures to be submitted to various people, including that most important per sonage, the Licensing Authority, the latter particularly in connection with passenger-vehicle fares. The operator cannot expect a Licensing Authority to be sympathetic towards any increase, the justification for which cannot be fully proved.
How some owners Of vehicles, not only amongst hauliers, but in the passenger-carrying and ancillary fields, have been able to cope with income-tax returns is a problem which we certainly are not able to solve. We would also hesitate to say, concerning such cases, as to who reaps the benefit, if any. It may be that an operator thinks that it is he who does, but finds later that he has, unknowingly, inflated his " profits " by not debiting his receipts with full allowances for expenditure.