Australia
Rail Plant Hire Equipment Business
The backstory
Family owned rail machinery rental business wanting to grow and expand into new markets, save costs and have better exposure to financial reporting. The Director was hands on with the operations and the business heavily relied on him to function daily. A holiday was out of the question.
01
The challenge
- The client did not have financial reporting visibility monthly. Internal accountant did not have the skills to formalise financial reporting.
- Employees skill levels required training and development to improve their capabilities.
- Costs were extremely high and the company was making low profits.
- There were no policies and procedures for the operations of the business.
- No detailed sales budget or financial budget in place.
- The Director was hands on with the day to day equipment planner and spent less time networking and selling as a result. He was the only person that was aware of the rates for invoicing and would waste hours every week to remember rates and equipment on / off hire.
- All payments were manually entered into the bank system, duplicating effort, increasing inefficiencies with processes and increasing the risk of fraud and error.
- The payroll was done manually – also increasing the room for error.
- They were manually pumping oil into equipment – taking 2-3 hours per day to fill from a POD.
- Pre and post hire checks were not being completed by employees every day.
- Employees were encouraging Client Supervisors to approve paperwork for more hours than they had worked.
- There were no utilisation reports for machines.
- No analysis of job profitability.
- The Director treated employees as ‘mates’ and did not take him seriously which left him doing a lot of the work.
02
Our Solution
03
Results
$100,000
Saved in insurance
$162,000
Saved on interest rates
- In less than 30 days we saved the client $100,000 in insurance premiums. We worked closely with a broker to provide insurance for equipment at the right valuation and right applicable coverage.
- Created policies and procedures that enabled desired results from employees, e.g. spending was no longer allowed unless authorised by Management within their authority limits. This assisted with further cost savings.
- Financial visibility enabled the company to purchase more equipment with confidence and certainty.
- The newly created Cash Flow forecast determined when new equipment or major purchases could be made.
- Created weekly KPIs for each machine and desired objective, such as sales targets to identify action plans in real time.
- Created detailed sales budget and financial budget which was compared to actual monthly with actionable tasks noted.
- Creating processes and systems to allow the Director to step back from the day to day operations and was able to spend more time networking and closing deals that generated greater returns for the business.
- Reduction in fuel and oil expenses through purchasing a fuel tank and negotiating better deals with a new supplier of oils and lubricants.
- Restructuring financial loans to save on extremely high interest rates of $162k per annum.
- Automated the payment and payroll processing with systems and internal controls.
- Employee cost savings with greater pumping equipment to complete daily tasks more efficiently and quickly.
- Improved inspections for hire returns allowed the company to on charge damages and repairs to the customer.
- Better control over timesheet managementand less ‘extra’ hours paid to employees that were not performing work.
- Created a utilisation report to identify underperforming equipment and investigation to take place. Having the visibility of future equipment forecasts allowed Management to fill in the gaps and increase sales that would have otherwise been lost with time.
- Job / Customer profitability reports allowed the Director to either walk away from future non profitable clients or increase prices to make a profit.
