Across various industries, accounting remains one of the least exciting aspects, which holds even in the trucking sector. That notwithstanding, it’s one aspect business owners can’t afford to ignore, as operations can rapidly fall behind with accounting behaviors such as poor bookkeeping.
For owner-operators, bookkeeping is an essential aspect of running a trucking business. It fosters the organization and analysis of all financial statements to give you a clue about the business performance. There are numerous means and benefits of engaging in bookkeeping as a trucking business owner, and we discuss all these in detail.
What Is Bookkeeping for Trucking Owner Operators
Bookkeeping incorporates the processes involved in maintaining the financial records of a trucking business’s daily transactions using a general ledger. In the real sense, bookkeeping is closely related to trucking accounting; however, it’s not as comprehensive, making bookkeeping a routine administrative process that calls for relatively little skills and thinking.
As such, truck drivers and owner-operators are capable of handling most of their bookkeeping without professional help. A prevalent method truck owner-operators employ for bookkeeping is tracking all costs, including fuel purchases and meal expenses, and keeping track of distance traveled.
Bookkeeping Options For Trucking Businesses
Evidently, owner-operators need to understand bookkeeping for their businesses. However, for most people, it remains a complicated endeavor, and in such a scenario, there are other options business owners can take to ensure they do not make mistakes. One such option is hiring an accountant.
Accountants can engage in a business’s bookkeeping and use the financial records for various administrative purposes, including tax planning, generating financial statements, and engaging in cash flow analysis.
Today, technological breakthroughs have also impacted the trucking industry for the better. Owner-operators can explore effective accounting software in carrying out various administrative aspects of their trucking businesses.
Tips For Bookkeeping
For owner-operators looking to learn and personally engage in bookkeeping processes, some tips make the whole process much more straightforward. Here are the best tips for managing the bookkeeping for a trucking business.
Stay Updated
Multiple business owners have tagged bookkeeping as a complex process. And while this holds to some extent, bookkeeping becomes easier when financial records are updated consistently. Therefore, owner-operators should look to maintain their books as frequently as possible and no fewer than once a week.
The essence of an updated financial record is to have a clear view of the business’s present financial situation. Understanding your business’s current position can effectively help make long-term and short-term decisions needed to run and grow the business.
Owner-operators with out-of-date financial records quickly realize how difficult it is to balance the books when transactions compile. Additionally, there could be instances where business owners forget the source of some transactions after a long time. All in all, updated financial records mitigate the risks of errors and missed deductions.
Keep Notes
Taking records of specific cash outflows and transactions is another good tip in bookkeeping. It is not always possible to record all financial transactions in the business books as soon as they are made. Hence, to avoid undocumented transactions, business owners should always take note of the trade in a journal or any similar medium.
Taking notes also helps track all cash inflows and outflows, making it easier to chase down invoices. By keeping notes, bookkeeping becomes so much more time effective.
Create a Business Bank Account
A common mistake owner-operators make is mixing business and personal finances. Creating a specialized account for business transactions also makes bookkeeping easier in running a trucking business. These accounts come with credit cards that interface directly with the bank and function best for business-related transactions.
Business accounts also foster a certain level of privacy, as business owners need not divulge information about themselves when making a transaction. Most financial institutions offer customers the option of requesting a transaction statement, which is very accurate and explicitly shows a business’s financial records over time.
Be Familiar With Cost Per Mile
Every business has specific metrics that can be used to measure its health and performance, and for trucking, one significant metric is the average cost-per-mile. Determining the cost per mile is pretty straightforward; thus, business owners need to calculate the number of miles traveled in a month and divide it by fixed and variable costs. Owners looking for a quicker alternative can employ software in calculating their average cost per mile.
Determining this information is advantageous regarding effective decision-making. On the one hand, owner-operators can put a valid price on their services to ensure profitability. It is also an effective strategy for identifying cost-ineffective aspects of a trucking business, such as operational costs, and deciding to cut back on these aspects.
Employ Effective Software
Technology has grown rapidly and drastically impacted different aspects of society by streamlining various complex processes. Regarding the trucking industry, numerous software currently exists to help truck drivers and owner-operators in different administrative functions, including bookkeeping.
One significant software prevalent in the logistics industry for bookkeeping and accounting processes is the transportation management system (TMS). This software is a logistics platform that employs technology in managing a trucking business. They come integrated with accounting platforms that simplify bookkeeping and automate complex and lengthy administrative processes.
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Aside from bookkeeping, it also offers some extra features that provide a clear picture of the performance indicators needed to run the business efficiently. Some of these key performance indicators include;
- Total revenue
- Total expenditure
- Profit
- Loss
- Cost per mile
- Account payable
- Freight cost per unit
- Maintenance costs
- Total and average salaries
As an owner-operator, effective bookkeeping is essential to maintain the profitability of your trucking business. If you choose to do it yourself, these tips will help you maintain a healthy profit margin and make effective decisions that benefit your company in the long run. For owners seeking to employ trucking bookkeeping software, the best platform depends on several internal factors, including the business stature, cost, and level of competency with technology.
Small-scale businesses are, however, advised to stick to essential software. While these platforms might not be loaded with cutting-edge features, they incorporate crucial elements that make bookkeeping easier. Businesses with a more extensive fleet can employ TMS for better control over operation management.