Trucking is a tricky business. Apart from managing the business, we also have to do our bookkeeping regularly to enable us to file our tax returns and systematically complete the day-to-day tasks.
The six critical tips to stay up-to-date in our trucking business bookkeeping include the following:
1. Keeping up-to-date:
We need a clear picture of our current finances to better prepare for short-term and long-term decisions. Maintaining accurate and organized financial records and keeping track of all our receipts and payments helps us to optimize our business. Deferring all our bookkeeping for later can create issues. When we finally find time to do the bookkeeping, we may not have a complete recall of all the transactions. This will only cause us to make errors in categorizing the expenses correctly. It will also prevent us from taking advantage of all available exemptions and deductions.
2. Using the right software:
We need to use specially designed software for the accounting purpose of the trucking business. Integrated trucking accounting services help streamline the tedious process of bookkeeping. Accounting software for the trucking business has specially designed reports to analyze various aspects of accounts receivables. It accounts for payables, multiple costs, days’ sales outstanding, cost per mile, average debt, profit, and loss per mile. All these reports will help us streamline our trucking business’s profitability and performance.
3. Maintain a business credit card:
This is the easiest way for us to upload our transactions. Most accounting systems can use our bank and credit card statements by creating an interface with them directly. Whenever we make a payment, it is automatically updated in the accounting system. This saves a lot of time in the manual entry of the accounting records. This helps eliminate our manual errors when we erroneously input some information incorrectly. We should attempt to segregate our personal and business credit cards and related transactions. This enables us to derive a true and accurate picture of our company accounts.
4. Understanding the metrics related to our cost per mile:
It is critical to know how our trucking business is performing financially. The key metric in all trucking operations is the average cost per mile. To calculate this, we must sum up all our monthly fixed and variable expenses. The sum is divided by the total miles we drive in a particular month. There are great online calculators available for us to compute this metric. This enables us to understand whether our trucking business is profitable or not. We can also derive our revenue information based on our complete billing information. Analyzing our costs in this manner also helps us identify high-cost areas and see whether we can measure to cut down expenses in these areas. For instance, if we find out that our average fixed costs per mile are high, we can take constructive measures to reduce our fixed cost per unit. This kind of analysis also provides us with a performance measuring scale.
5. Reduce the day’s sales outstanding:
We need to reduce the outstanding amount of one day’s sales to ensure better collection of our overdue accounts. This metric measures how often the due sales amount is converted into cash. The higher this measurement, the better will be the cash management policy. We need to calculate our daily average sales by dividing our total sales for the year. A low days sales outstanding indicates some customer dissatisfaction with our trucking services. They may be reluctant to pay for our services, or they may not have the liquidity to pay for our services. Either way, we can increase our follow-up to collect the due money or discontinue our trucking services for this particular client. We should expedite the funds’ collection and send the bills to various clients to enable faster collections.
6. Keep notes:
It is essential to maintain notes. We can maintain either manual notes by writing everything down or digital notes on our smartphones. While being preoccupied with the long working hours, we may forget to track each payment and to whom it was made. So usually, when we complete our accounting records after the lapse of a particular time, we may forget the different expense heads under which it is to be accounted or even what certain payments were made for. A thorough record of all our invoices enables us to create a perfect invoicing system. This also facilitates the perfect recall of all details. We can also choose expert virtual bookkeeping services.
Accounting and bookkeeping are critical aspects of streamlining and optimizing business operations. We need to follow the best accounting practices to optimize the performance of our trucking business. If required, we should also take help from accounting experts. This enables us to comply with local regulations and industry-specific requirements.