Central Freight Lines entered into an amendment to its previously announced agreement and plan of merger with Jerry Moyes’ North American Truck Lines and Green Acquisition Co. entities. The agreement provided that Moyes and certain related parties would become the owners of Central, and Central would cease to be a publicly traded company. The amendment waived the purchaser’s need to obtain financing prior to closing the merger, and clarified that there is no pending litigation against Central that must be settled prior to closing. All Central stockholders will receive $2.25 per share.
Comdata Corp. announced the launch of a new brand identity to position the company as the “world’s premier payment innovator.” As part of the launch, the company says customers now can use a new website (www.comdata.com) to manage all of their Comdata accounts through Customer Quick Access on the homepage.
Wright Express, a provider of payment processing and information management services, recently hosted its 12th annual Lead User Group Conference in Portland, Maine. More than 20 companies attended the forum, which solicited feedback and direction on how Wright Express can best serve the current and future needs of its fleet customer base. The Sept. 20-22 meeting also provided business and product updates, industry overviews and best practices, and panel discussions.
When it comes to finances, ignorance definitely is not bliss. Still, I suspect that few trucking companies practice basic financial discipline – what I would call “effective financial management.” Running a trucking company is tough enough without doing so in managerial darkness. Tracking the flow of income and cash through your business is one of the easiest ways to improve results or spot trouble at the earliest possible moment.
Andy Dougherty, chief executive officer of Atlanta-based Ready Trucking, learned this lesson early in his career. Dougherty’s father, Don, founded Ready Trucking with a partner when Andy was just two weeks old. By the time Dougherty was 13, he was working for his father, entering fuel tax information into the company’s computer system. He moved on to other jobs within Ready Trucking and eventually found himself running his father’s 100-truck company. In the 10-plus years that Dougherty has been CEO, the company nearly has doubled in size – adding 90 trucks – and now employs about 230. But that success has not come easily.
“I spent a lot of time working for this company learning what we did and why we did it,” Dougherty says. “There were days when I was entering information into the computer, thinking we did a jam-up day, and it wasn’t always the case.”
For example, Dougherty sometimes found that the profit margin resulting from a strong influx of shipments was much lower than expected. His wakeup call on monitoring company finances came during a routine check of tire expenses.
“I studied the fleet checks – the replacement of bad tires – and noticed that we were replacing far more tires than we needed to be,” he said. “This got me thinking, ‘Are we spending too much money elsewhere?’ ”
With that in mind, Dougherty taught himself to use Microsoft Excel and created a basic spreadsheet that laid out specific daily and monthly cost projections.
You might pay tens of thousands of dollars for systems to help your company track its finances. Dougherty did it with a $300 purchase of Microsoft Office and lots of time and tinkering. Many companies truly need complex systems for tracking finances, but even the simplest, least expensive option is better than nothing at all.
“I now know by noon whether we have made money that day,” Dougherty says. “I know all of my daily fixed costs like salary, rent and average maintenance costs ahead of time. All I need to plug in is the amount of cash coming in.” After he adds his variable costs, he can project a daily profit or loss.
Through further study of his business, Dougherty also implemented an e-mail-based invoicing system and has been able to eliminate one position while seeing a 12- to 13-day improvement on payment returns. By being familiar with his company’s cash flow, Dougherty recognized the lag between sending out invoices and receiving payment, and was able to address the issue – with astounding results.
It can be tempting to get comfortable in the management role, especially if the company is doing well. Don’t. A top manager’s job is to think about everybody else’s job and drive costs down. Trying to do everyone else’s job – or merely going with the flow – will only lead to problems in both the long and short term.
“There was a day when I just couldn’t get a route covered,” Dougherty recalls. “I told my dad that I was going to take the route, just this once. He let me know, in no unspecific terms, that he wasn’t paying me to dispatch – he was paying me to manage. I needed to figure out a way to cover the load.”
On the battlefield, it’s this same reasoning that prevents the four-star general from personally leading the troops into battle. In the boardroom, it’s what enables a manager to do his or her job effectively. After all, how can you keep a close eye on the company if you’re out making deliveries?
“My job, essentially, is to never be happy, especially in this business,” Dougherty says. “I am always one account or one customer away from being in trouble. I have to be aware of all my options and know what can be done to fix the situation.
“My advice is really simple,” he continues. “You have to know what your costs are. Without exception.”
Don’t let laziness or ignorance prevent you from knowing where your money is going. If you’re not committed to the discipline of tracking your company’s daily profits and cash flow, there are plenty of people out there more than willing to take it off your hands.
Analyst: 2007 economic outlook remains unclear
Factors that drive freight are presenting a mixed picture for 2007, according to Nashville, Ind.-based transportation forecasting and research firm FTR Associates. A declining housing market and automobile production cuts likely will be a drag on continued growth in other segments of the economy, the firm says.
“We think that housing will find a floor and that the economy will expand at slightly below its long-term rate of growth at about 3 percent in 2007,” says Steve Graham, vice president of market analysis for FTR.
Growth will be fueled by business investment in equipment and by exports, Graham says. With solid balance sheets and a fairly tight labor market, companies will continue to invest in productivity-enhancing equipment. And exports will be bolstered by a weak dollar.
“The global economy is still experiencing strong broadly-based growth,” Graham says. “However, there is a significant danger that secondary effects from housing and the slowing auto sector could spill over to the wider economy. And if businesses in other industries respond to the weakening activity by curtailing their own investment and hiring plans, the economy could devolve into recession.”
FTR Associates now believes that the chances of recession, most likely in the first half of
2007, are one in three.
Equity fund buys majority interest in CF
CF Holding Co. Inc. and its subsidiaries – Caldwell Freight Lines, Foothills Trucking and Prime Time Delivery & Transport – announced that Harbert Private Equity Fund II acquired a majority interest in CF, the nation’s largest LTL carrier that specializes in transporting furniture.