With its low barriers to entry, comparatively modest startup costs and a growing requirement for its services, freight brokering is a growing field.
But not all freight brokers are equally successful.They need to ensure that cargo reaches its rightful shipper after being dispatched from the carriers. And freight brokers need to wear a lot of hats, from ownership to accounting to marketing.Their success depends on their hard work.
Among all of these, trucking bookkeeping is essential to help freight brokers not lose money. Unfortunately, this is the aspect of their job that gets neglected the most. The result: mishaps and lost revenue.
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Bookkeeping Mistakes No Freight Broker Should Make
Keeping thorough records of your financial transactions, such as sales, purchases, payments and receipts, is an important part of any business. Therefore, bookkeeping plays an integral role in your organization’s accounting process.
Here are a few common bookkeeping mistakes not just freight brokers but any business owner should avoid.
1. Doing Your Own Bookkeeping
You may save some time and money initially by trying to do your bookkeeping yourself or assigning one who is not specialized in the task, but the consequences can be costly.Higher bond premiums due to a costly error and unforeseen future expenses are likely tomake you regret your decision to do it yourself.
Instead, look at the bigger picture and refrain from short-term profit-making. Seeking the help of trucking bookkeeping software or hiring an efficient bookkeeper delivers quick, efficient and error-free outcome to ensure long-term benefits.
2. Putting Off Important Tasks
Keeping any business running is tough.As a freight broker, you may find yourself simply trying to finish your day-to-day work. As a result, important bookkeeping tasks get ignored. Tasks such as reconciling bank statements and keeping track ofcredit card accounts every month are important, as it helps you find errors and keep tabs on available cash/credit.
It can be temptingto postpone these tasks, but doing them monthly will help you identify problems regarding missing deposits, fraudulent charges and lost checks.
3. Not Maintaining Proper Expense Categories
Not categorizing your expenses properly is the biggest mistake freight brokers commit, yet it’s one of the most common.It often happens if an inexperienced bookkeeper handles your expenses. Not categorizing your expenses or creating too many categories are bothbig red flags that indicate that your books aren’t well prepared.
The best way to fix this issue is to set your accounting software the right way from the very start. Accounting software such as MYOB and QuickBooks are well equipped to handle this, if used properly.An experienced bookkeeper can help with this. Just make sure that no new expense categories get added without considering it thoroughly. Don’t know how to categorize an expense? Ask a professional for assistance.
4. Delaying Credit Card Payments
Any good businessperson knows how great tool credit cards can be. Need to make payments when funds aren’t readily available? That’s what credit cards are for. But any business can sometimes forget to pay off their credit cardsat the end of each billing cycle. It’s not always intentional but can happen due to poor bookkeeping. The result is a huge interest charge for your credit card balance.
You can take advantage of interest-free credit cards to improve your cash flow and delay payment. However, promptly paying your balance interest and credit card fees, in addition toproper bookkeeping,can prevent any dent in your profits and reputation. The solution is simple. Just set a reminder to review your credit card statements for each billing period and then do it!
5. Incomplete Invoices
Never skip details when making out invoices. Instead, put as much detail as possible about each fee to give your customers a wider scope for identifying their charges and categorizing their expenses.
For example, your customers should know whether you charge per kilometre, per piece, per kilogram or have a flat fee. So, make sure details like that are mentioned in the invoices. Any additional charges, whether for fees or fuel, should be listed as separate line items. This will also accelerate the payment process and improveyour cashflow.
6. Insufficient Tracking of Invoices and Receivables
Unless you account for your receivables, you won’t get paid on time. Delays between a broker paying their carriers and customers paying the broker can negatively impact cashflow.
A streamlined invoice processing service can help improve this situation, especially if you’re having trouble tracking and collecting invoices.
7. Avoiding Liabilities
One of the major factors to consider during surety bond underwriting is evaluating the risks involved with calculating your assets and liabilities.
The main goal here is to show that you have enough assets to cover your liabilities. An inexperienced bookkeeper may remember to record a liability but forget to reverse it after the payment is made. This one error can result in your shareholders havinga false picture of your business having inflated obligations and expenses, making it appear less financially stable than it is.
You can avoid this type of error by hiring an experienced bookkeeper. And by having an owner or Certified Public Accountant (CPA) look over the matter, you make sure your balance sheet is scrutinized regularly for any unusual account balances.
Regular bookkeeping keeps track of all your financial transactions before things get out of hand. But purchasing accounting software isn’t enough if you don’t know how to use it. For this, you need trained professionals.