As we are moving into a new fiscal year, now is a suitable time to look at how your business is doing financially.
Transport, haulage, and logistics companies have had a rough few years. The pandemic, Brexit, and the ongoing cost-of-living crisis have all caused a lot of trouble. Not to mention the many times that government policies changed. You may have set up several disaster planning and risk assessment plans, but when was the last time you looked at them with a focus on your finances?
As transport management consultants, one of the most important things we do is help our clients get stable and enable them to consider their future. It's easy to only think about what's going on right now, but for businesses to stay successful, they need to keep an eye on what could happen in the future.
We’d like to share some of our ideas for how small and medium-sized enterprises (SMEs) in the transportation industry could improve their financial health.
Corporation tax changes
In Jeremy Hunt's spring budget, one of the most important things he said was that Corporation Tax will go up on April 1, 2023. It's important to know what rate you'll be paying because good tax management is something you should think about all year long, not just when you're putting together your end-of-year reports.
Under the new changes, the government has confirmed your corporation tax rate will go up to 25% if your taxable profits are more than £250,000.
The tax rate for businesses with taxable profits of less than £50,000 will stay the same, at 19%.
Companies with taxable rates between £50,000 and £250,000 will pay corporation tax at a sliding rate between 19% and 25%.
Capital expense planning
Your working capital is the money that comes into your business. You need to make enough money to pay for your regular expenses and put some money away in case something unexpected comes up.
We tell our clients to keep a close eye on their capital expenses to make sure they aren't spending money on things they don't need and to try to plan for any upcoming costs.
In the transportation and logistics business, it's important to set aside money for buying a new fleet. You might need to add a new vehicle to your fleet at any time, or you might have to pay more to fix up older vehicles. As part of an asset management plan, you should look at how often each vehicle is used, if its fuel efficiency is getting worse or if its maintenance costs are higher than expected, as well as the mileage and condition of the vehicle.
If you pay close attention to your fleet, you can plan for new vehicles and include that in your future budgets.
VAT and cashflow management
Your cash flow needs to be managed all the time to make sure you are getting the most out of your budget and making it go as far as possible.
Keeping track of your cash flow and VAT means being organised. Every expense needs to be written down, and you need to keep all the receipts and sales invoices that show how much money comes in and goes out of your business.
Everything you spend money on needs to be carefully looked at, planned for, and kept track of.
If you charge VAT, you need to know the right rate, which could be standard rate, reduced rate, or zero rate.
The gov.uk website handy list of the VAT records you must keep.
Anticipating what could come in the next quarter
A big part of what we do as consultants is help logistics and transport companies get ready for the next quarter.
This could be as easy as making sure there are enough people to do the job and any holidays are covered. It's also important to make sure your fleet is ready for the summer. For example, the last thing you want is for your drivers to be unable to work because they need to update their CPC periodic hours or because your fleet needs their annual service or MOT.
A key part of any plan for managing money is paying close attention to your upcoming work schedules. That's because you always want to work as quickly and effectively as possible. Even one day of unplanned downtime can have a big effect on your bottom line.
Do you have an aging workforce?
If you’ve got a long-term workforce who have been working for you for years, it is hugely positive because it shows you are an exemplary employer. But it can also be worrying from a succession planning perspective. Have you ever spoken to your team about their individual plans for the next two to five years? Do you know if anyone is planning on taking retirement or thinking about moving into a new position?
Statistics from the Office for National Statistics has confirmed “The HGV driver workforce is older than the average across the total employed population. Between July 2020 and June 2021, 29% of HGV drivers were over ages 56 years or older, compared with 19% for the overall employed population.”
Driving is a tiring profession. There are many hours on the road, with a long-time spent away from loved ones. Unite, the union has long been concerned about the rising ill health amongst lorry and bus drivers and there are continual fears of a driver shortage.
As part of your succession planning, you need to be continually checking with your staff to assess any potential retirement plans. If a senior member is due to step down in the imminent future, do you have plans in place to train someone new as a replacement? Recruitment is always a tricky balance, but planning ahead can ensure the smooth running of your business.
Our consultancy expertise can help you plan ahead
Our consulting services at CJC Transport are meant to help you run your business. We can work with your finance team to help with strategic planning and also help with training and hiring staff.
For your business to be successful, you need to plan ahead, but you may not have time to do that when you're busy with the present. But this is where we can help and make a difference. We know how to strategize and make plans because we know about the transportation industry. We can work with your finance, HR, and operations teams to make sure you have the right fleets with the right drivers at the right time.
To find out more about how we can help you, please contact us today.