Income Up? But What About the Expenses?
October, 2010It’s time to talk about just how your operators track expenses. At a couple of locations I audit in the mid-South, I find that the way labor is charged gets a little blurry.
For instance. Sometimes employees can be transferred from your garage to another, but it takes a few weeks for the paperwork to catch up. In the meantime, you are still paying for that employee, even though they are working elsewhere.
In one case, I had a manager who was sent to my garage so he could learn the technology. He managed the garage for a few months, and then was transferred to another location. We all knew he was going to be temporary, but for whatever reason, the accounting paperwork never caught up. He worked at my location, and in fact did a good job, but we never paid the operator a dime for his services.
Wow, we got a good deal, right? Well, maybe not. Somebody paid for him. If it wasn’t us, then who did? This was a substantial amount of money, and I doubt if the operator was donating his time to us. I come from the old school. If I find the trays on the airplane dirty, I begin to worry about the engine maintenance.
How about another example. I was sitting with the operator, and a discussion was going on about the phone bills. I said, “What phone bills?” … and then caught myself and shut up. In the years that the operator had been running the garage, I had never paid a phone bill. I knew we had three phone lines (credit card machine, fax, phone) and they were all working. The managers in the room looked puzzled. It will be interesting to see if we get billed, and even back-billed, for our telecommunication service.
So, once again, someone was paying the phone bills, but it wasn’t us. They were in the name of the operator, so they were paying them. But who was being charged for that service? It was nearly $300 a month, $3,600 a year.
I review the monthly statement carefully each month. I check every invoice that is paid and ensure that it is, in fact, an invoice for our garage. I am diligent. What about most garages where the owner seldom looks at the monthly statement? How often are charges, big charges, sent through, approved automatically, paid, but never compared with actual on-the-ground usage?
These are cases of paperwork not being properly handled, of charges inadvertently going to the wrong place. But they can mean a lot of money to you. In a word, check your monthly statement – every month, and carefully. It’s time well spent.
What are your staffing plans for holidays? I went in on Labor Day and found an entire contingent on-site and working. Well, at least on-site. They weren’t working, because the garage had about 10% of its normal occupancy. We could have done with six fewer staff for that day.
First, I said, well, as long as they are here, let’s scrub the floors or paint a wall. Can’t do that – have to check with the union. Sigh …OK, let’s send them home – same answer. So we pay them and they do nothing.
Plan your staff allotments well in advance. Take holidays into consideration. Be sure that when you have staff on-site, there is work for them to do.
Oh yes, the problem mentioned above does work in reverse.
We had a shift supervisor transfer out, and his paperwork didn’t catch up for a month. I noticed that we had been charged for his time for four weeks, even though he had been long gone. They credited the 160 hours, but then I asked for taxes, FICA, health insurance and the rest. It was a lot of money.
I will always wonder if the garage that he moved to had been invoiced for his time that month. And if so, did the operator get twice the money; or if not, none of it?
Parking is a cash-rich environment. Large amounts are being deposited daily into operators’ accounts and owners’ accounts. Often we look at the income, and neglect to oversee the expenses. And by “we,” I mean both the owner and the operator.