How to Avoid Car Rental s. Company. Biggest Accounting Mistakes

Transcription

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2 How to Avoid Car Rental s Company Biggest Accounting Mistakes

3 Objectives Why What How Why - do we need to avoid accounting mistakes What - Identify the biggest accounting mistakes How - do we avoid them

4 Why do we care?

5 Doesn t the CPA take care of everything at the end of the year?

6 Lenders are Tightening Requirements

7 P&Ls Banks, Lenders and Leasing companies determine our credit worthiness through our financial statements No credit line No financing for cars! No cars No car rental company

8 Typical Lender Requirements They want to know about your business How long have you been in business Ownership structure Resume of key personal Source of business

9 Typical Lender Requirements Company Statistical Data Utilization % Fleet size Average daily rate Monthly RPU Cap cost of your fleet Depreciation rate

10 Typical Lender Requirements Personal financial statement 3 years of tax returns P&Ls Last three full years Interim

11 Financial Statements

12 Accounting Mistakes

13 Accounting Procedures P&L Format Easy to read Easy to analyze Industry specific

14 Accounting Procedures Vehicle Depreciation Rate 2.5% / 2.25% / 2.00% / 1.67% /??? Cash vs Accrual accounting method Year over Year comparisons Balance Sheet vs Income Statement Expense it or book it?

15 Auditing Your Financials

16 Auditing Your Financials Payables ACH Payments Receivables Credit card statements Bank statements Voucher payments

17 Auditing Your Financials Charge backs Damage repairs / collections Airport reporting Tax reporting Is your counter system charging the correct tax rate? Year over year comparisons

18 Planning

19 Planning Fleet acquisition Fleet disposal Budget Budget vs actual Cash Flow Cash management

20 How Do We Avoid the Mistakes

21 5 Ways Companies Handle Financial Accounting and Bookkeeping

22 1. Owner / Operator No P&Ls No time or understanding Manage by the checkbook balance Positive balance is good!!! Receipts and Important papers go in a box CPA (or uncle Jimmy) will figure it out at the end of the year

23 1. Owner / Operator Cost Little to no cost throughout the year Benefits Forced to be in touch with expenses Drawbacks Time, accuracy, expertise, lost opportunities

24 2. In-House Controller / CPA Firm Highly skilled industry professional controller Car rental knowledge Monthly P&Ls prepared and audited by staff Weekly / Monthly review meetings CPA firm prepares yearly audited statements

25 2. In-House Controller / CPA Firm Cost Industry specific controller can run $95-$175k CPA accounting firm $6,000 - $10,000 month Audited financials $20-$40k year Benefits Lenders LOVE audited financials Drawbacks High costs, Time spent with accounting firms

26 3. Do it Yourself / Admin Clerk Prepares P&Ls with limited industry knowledge or expertise Minimal time to audit & review Accounting seen as something we get to when we have time Give to CPA at the end of the year for Tax preparation

27 3. Do it Yourself / Admin Clerk Cost Admin clerk $15-$20 an hour Benefits Less expensive way to produce P&Ls Drawbacks Not seen as trustworthy by lenders, missed opportunities, accuracy questioned, hard to scale

28 4. Accounting Firm Hire accounting firm to prepare monthly statements Produce and review P&Ls monthly CPA firm prepares a year end Reviewed statement

29 4. Accounting Firm Cost Accounting firm $4,000 - $7,500 month CPA Reviewed financials $8 - $15k year Benefits Lenders have a level of comfort with reviewed statements Drawbacks Level of industry knowledge can be challenged, $$$

30 5. Third Party Professional Utilize third party industry professional that works with an in house admin clerk Prepares monthly P&Ls Performs Internal audit monthly

31 5. Third Party Professional Cost Admin Clerk $15-$20/hr Bookkeeping firm $2,000 - $4,000/mo Benefits Industry expert at a controller level for less $$$ Level of comfort for lenders Drawbacks Not a CPA, does not perform year end taxes

32 What s best for you?

33 Key Points to Consider Make sure your Controller / Bookkeeper / CPA understands the car rental industry Prepare your P&Ls in an easy to read and review format Audit your financial monthly Communicate with your lenders Good bad ugly

34 Remember Accounting isn t just writing checks, paying bills and something a CPA does at the end of the year

35 Remember Accounting is a tool to be used to run a successful business Most everything one needs to know about a company can be learned through it s financials

36 Are your Financials something you trust and can take to the bank???

37 Thjhh554 You Rob Dau LRS Management Solutions Inc.

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