How to effectively control finances in transport: from calculations to savings with fireTMS

Accurate calculation of freight transport costs, both at the planning stage and when settling orders, is key to the financial stability of a transport company. It is important to take into account not only fuel expenses, which constitute a significant part of the budget, but also operating costs, salaries, licences, insurance and leasing. Effective financial control requires a precise estimate of the fixed daily costs of the vehicle, the driver’s salary and fuel consumption per kilometre travelled. fireTMS includes tools that make this much easier.

The most common problems with cost control in transport

Transport companies face daily challenges related to cash flow control. Understanding the problems that arise from this is the first step to effective expense management in a company.

Lack of accurate cost calculation before order execution

Determining the actual costs incurred by a transport company is a much more complicated task than it might seem. After taking into account obvious expenses such as fuel, driver salaries and road tolls, it is necessary to add depreciation costs, which are more difficult to estimate. The problem is exacerbated when it is not possible to clearly determine how long a vehicle will be used for transport.

The form of vehicle acquisition – cash purchase, credit or various types of leasing – has a significant impact on the final calculations. In turn, unforeseen events during the execution of orders often lead to increased costs for specific orders. Additional expenses may result from, for example, breakdowns, collisions and accidents, or driver illness.

Empty runs and suboptimal routes

Empty mileage is one of the most costly problems in road transport. Planning routes without professional tools, in turn, leads to increased fuel consumption, the cost of which can account for about ⅓ of the total transport costs. Proper transport optimisation reduces the distance travelled by vehicles, which means lower fuel consumption and, consequently, lower operating costs.

Lack of control over fleet profitability

Increasing fleet profitability should be a priority for every transport company due to the low margins in the TSL industry. Constant control of expenses helps in this regard. A major problem is the lack of appropriate tools for data interpretation and effective fleet monitoring, which makes it impossible to control costs and thus reduces the effectiveness of managing one’s own profitability.

Late payments from contractors

Another pressing problem in the transport industry is the backlog of payments for invoices issued, as well as long payment terms. Delays and last-minute invoice payments cause a decline in financial liquidity. This poses a direct threat to the solvency of transport companies.

How fireTMS supports cost estimation and control

The fireTMS transport management software includes tools for precise calculation of transport costs, which allow for effective management of expenses and maximisation of profits from each order.

Calculation of transport costs at the order planning stage

The estimated costs of an order in fireTMS are automatically supplemented by the system at the order entry stage. The system uses the operating costs of the selected vehicle and the rates of the assigned driver and calculates the total based on the loading and unloading points and the selected route. In addition, it takes into account the location of the vehicle assigned to the transport, automatically calculating the cost of travel to the loading point.

To take advantage of the accurate cost calculation in fireTMS in practice, simply go to route planning using maps. Here maps in the fireTMS system allow you to precisely calculate the cost of a route, taking into account parameters such as: the cost per litre of fuel, vehicle fuel consumption, fixed vehicle costs per day, driver’s salary and other additional expenses. The system will automatically calculate the travel costs for each route option, including road tolls. The summary of options presented in the system includes costs broken down into domestic and international sections. In addition, the system takes into account traffic restrictions for lorries, such as the height of viaducts or the permissible weight of vehicles.

You can read more about route planning using maps in our article

Comparison of estimated and actual costs thanks to GPS integration

After creating an order, all information about the estimated costs can be found in the order view in the Financial data tab. Once the driver closes the order, the actual number of kilometres travelled appears in the same place. This feature requires the integration of the fireTMS system with the vehicle’s GPS telematics, which transmits the car’s odometer reading. This allows you to verify the accuracy of the estimates and check their impact on the final commission.

Fleet cost and profitability reports

The Fleet costs report in fireTMS provides detailed data on vehicle operating costs broken down by type of expense. This allows you to calculate fuel consumption per kilometre from orders or directly from GPS data. The Fleet profitability report, on the other hand, shows data on the use and profitability of your own vehicles based on information from orders and entered costs. It includes key indicators for each vehicle: revenue per kilometre, cost per kilometre and income per kilometre. These transport reports allow you to better control your fleet’s expenses and make decisions about its optimal use.

Detecting when a driver leaves the corridor

Sometimes, drivers deviate from the planned route for various reasons, thus increasing fuel costs. To prevent this, fireTMS uses the Actual Routes function to monitor whether the driver is following the designated route. The system allows you to set the width of the transport corridor that the driver should follow. When a vehicle deviates from the planned route by more than the permitted number of kilometres, the system sends an e-mail notification to the dispatcher and records the event. This allows you to respond quickly and effectively when such incidents occur.

Importing fuel card costs from CSV or XLS files

Another fireTMS feature that helps control operating costs is importing fuel card costs from CSV or XLS files. This feature allows you to quickly enter data from fuel cards and other external documents into the system. The system automatically assigns costs to the appropriate categories and, during the first import, links the cost types from the file to those in the system. This allows you to increase control over transport costs and make estimated expenses related to taking on new orders more realistic.

Effective cash flow and debt collection management

Cash flow is the foundation of transport companies’ operations. fireTMS also provides proven tools for effective control of expenses and revenues.

Turnover and commission reports by branch

A key element of controlling a company’s finances is regular access to data on revenues and commissions earned from orders. In fireTMS, you can find a real-time financial report, Turnover and commission by branch, presenting the results of all company branches. It includes key indicators: costs, revenues, commissions, margins, and the number of orders and loads. The data can be filtered by date and exported to spreadsheets, which facilitates the analysis of the company’s performance broken down into individual units.

Discounts and trade credit as tools for improving liquidity

Flexibility and building good business relationships are also components of an effective cost control and optimisation strategy. That is why the fireTMS transport software system offers two solutions that improve both customer relationships and financial liquidity. The first is trade credit, i.e. granting trusted partners extended time to settle payments. fireTMS has a tool that allows you to automate credit limit management for specific partners or entire groups.  

Discounts, on the other hand, allow you to speed up payments by granting a fixed discount, e.g. from 1% to 5% for paying your liabilities before the invoice due date. This is important for financial liquidity, especially since very long payment terms are common in the TSL industry – even up to 60-90 days after the completion of an order. Discounts can also be applied in a convenient form in fireTMS. Simply add the discount value granted by the contractor when registering the purchase invoice, and it will be automatically included in the amount to be paid. This makes accounting work easier, speeds up payments and reduces operating costs.

Automatic collection of overdue invoices

An integral part of working in a transport company is also ensuring timely settlements with customers. fireTMS allows you to automate debt collection – the system automatically generates reminders of upcoming and overdue payments based on invoice data and sends them to recipients by e-mail. This saves time on regularly checking the calendar and manually sending reminders. Thus, automatic collection increases the effectiveness of debt recovery.

Accurate calculation of transport costs is a necessity for every company operating on the market. Low margins in the TSL industry make effective financial control a key element of management. The fireTMS system provides solutions that enable precise management of expenses and revenues already at the order planning stage, and then allow for accurate control during implementation and facilitate settlements.

Would you like to see how fireTMS can help you control your transport company’s finances? Register for free and start your 14-day trial period.