Management Accounts for Transportation Business
Bookkeeping for the transportation industry encompasses keeping track of financial transactions related to the operation of a transportation business. This can include expenses such as fuel costs, vehicle maintenance, and employee salaries, as well as revenue from the transportation of goods or passengers.
It is important to accurately record and track financial transactions to maintain financial stability and make informed business decisions, keeping your company profitable. Many transportation businesses use specialised software or hire bookkeepers with experience in the industry to manage their bookkeeping.
When thinking about bookkeeping, transportation companies may either choose to outsource the function or hire an in-house professional to perform the function; both approaches have their own pros and cons. In either case, costs and revenue of a transportation company should match up and it may be necessary to process large numbers of time sheets of jobs to obtain meaningful management accounts.
Features of bookkeeping for the transportation industry
The features of bookkeeping for the transportation industry typically include:
Integration with transportation management software: Many transportation businesses use software to manage operations, and bookkeeping software can integrate with these systems to import data and automate the process.
Invoicing and billing: The ability to generate invoices and bills for customers, and track payments received.
Fuel tracking: Tracking fuel consumption and costs, to generate reports to analyse fuel efficiency.
Asset management: Tracking the purchase and maintenance of vehicles and other assets, and generate reports to track depreciation and asset utilisation.
Payroll management: The ability to manage employee payroll and taxes, including calculating and tracking employee pay, benefits, and deductions.
Financial reporting: To generate financial statements and reports, such as balance sheets, income statements, and cash flow statements.
Tax compliance: Generating reports and tax filing necessary for tax compliance, such as sales tax reports and tax returns.
Accessibility: Accessing and updating financial information from anywhere, through desktop or mobile devices.
Key bookkeeping challenges faced by the transportation industry
- Managing costs: Transportation companies usually would have a small admin team, but probably a much larger front line temporary staff team as drivers. So, managing costs and wages of the drivers is always the biggest challenge. To stay compliant with employment laws, every member of staff, permanent or temporary, need to be paid. It is a challenge to produce meaningful management accounts reports needing to match the direct costs of drivers’ wages, and the transportation job from clients.
- Managing cashflow: Getting paid by clients and managing the cash flow can also be a challenge. Clients may have 30-day payment terms as is the normal business practice here in the UK, but temporary staff, including drivers, would have to be paid weekly. As such, managing cash flows can be challenging for transportation companies.
- Maintaining accurate records: The workload involved when following the rules of a transportation business; getting all drivers trained properly and staying on top of driver’s licenses etc. could mean a business needs more professional admin workers. Even if there is a large admin team to manage purchases and the sales ledger, it can be challenging to record transactions accurately and on time.
- System integration and security: Integration with other systems, such as transportation management software, can be complex and time-consuming. But it can also provide significant benefits in terms of automation and accuracy. Also. storing sensitive financial information, such as employee payroll information, can be a challenge for transportation companies. At the same time, it is important to ensure that data is secure and protected from cyber threats.
- Time management: Bookkeeping can be time-consuming and can take away from other important tasks related to running a business. It is important to prioritise bookkeeping tasks and allocate sufficient resources to ensure that tasks are completed accurately and on time.
Fraud protection: Fraud can be a significant risk for transportation businesses, and it is important to have systems and controls in place to detect and prevent issues. This may include implementing internal controls, such as segregation of duties, and conducting regular audits.
Closing lines
It is important for transportation companies to have accurate and up-to-date bookkeeping records to make informed financial decisions, comply with tax laws, and ensure the long-term financial success of the business.
Penny’s Bookkeeping Services has great experience working with transportation industries and we can help you to design your own bespoke financial process that works for you. You’ll have access to accurate and timely financial data as you need it.