Case Study: The Value In Outsourcing

Case Study

As a regulatory compliance service and product provider to the trucking industry it goes without saying that from year to year your customer base is going to change. If you are doing enough of the right things, through online marketing and word of mouth, you may be fortunate enough to acquire new customers. On the flip side, customers may go out of business, change service providers or attempt to acquire a similar skill set by hiring an employee to serve as their in house compliance representative. If the latter occurs, you may be given no more than a few days’ notice by your customer that they will be discontinuing the use of your services.

Recently, we encountered this very situation. A long standing customer had turnover in their safety and compliance department and their replacement had sold their skill set so well that we were advised that our services would no longer be needed. As mentioned, this type of scenario can happen and its all part of the ups and downs of business. However, what was really a tough pill to swallow was the internal conflict and debate we encountered regarding customer loyalties when we began receiving calls from both the new employee and the ex-clients’ accountant inquiring about routine compliance matters and the processes involved.

On one hand we have a former customer with whom we had had a very successful relationship with for over 16 years and only wanted to see them succeed. On the other we’ve been told thanks, but we’re moving on. Should we feel responsible for their compliance blunders and mistakes moving forward? Should we go out of our way to provide free consulting advice that takes us away from our pursuits in acquiring new business to help train an in house new-hire?  Sometimes you don’t know what you had until its gone.

Many trucking companies are constantly putting out fires when it comes to compliance, only giving it attention when its about to or already has burnt them.

This scenario led me to think about not only the cost savings (outsourcing vs hiring) but also the unseen potential liabilities related to compliance matters unattended to or handled incorrectly. Let’s look at this real life example. The company referred to above, let’s call them Joes Trucking Company, utilized the following services during 2016:

  • Managed without customer initiative the following permitting and fleet tax matters. The customer did not have to take any action to proactively commence any task related to;

    • IFTA Licence/Decal Renewal, Additional Decal Orders, IFTA Decal Inventory Assignment
    • Maintenance of Kentucky Highway Use Tax Taxable Vehicle Registration
    • Management of New Mexico Weight Distance Tax Permits and Account
    • Management of 22nd Series NY HUT Certificate of Registrations\Decals and Tax Account
    • Maintenance of records related to a substantial quantity of taxable substitute units for reporting purposes
    • Automatic response to any late filing assessment or deficiency
    • Renewal, new orders and cancellations of U.S. Customs Transponders
    • Unified Carrier Registration Renewal
    • Other matters included:
      • Arkansas Annual Report filing
      • New Jersey Corporate Business Tax Return, Annual Report and Resident Agent Renewal
      • Quebec NEQ Declaration and resident agent renewal
  • Over the course of 2016 Joes Trucking Company utilized our Full Service Fleet Licensing Solution which includes proactive management of the clients International Registration Plan account, creation and submittal of all applications, liaison with MTO as required, scheduling of appointments, attendance at all appointments, completion of all transactions and shipment of all plates and credentials to Joes Trucking Company with next day delivery. The above included;

    • 8 separate IRP Add Vehicle application transactions
    • 4 IRP Delete Vehicle transactions
    • 1 Fleet deletion and fleet to fleet transfer
    • 1 IRP Fleet Renewal
  • Joes Trucking Company was also utilizing our Fleet Tax Solutions which consists of IFTA and Weight Distance Tax Reporting and Internal Revenue Service 2290 Heavy Vehicle Use Tax filings and credit management.

    • IFTA records were received by TransReport Services on a monthly basis in both electronic and hardcopy form. Carrier internal records were, despite our best attempts to help them improve their processes, consistently fragmented and incomplete. We diligently pieced together all required data to form an audit proof record set.
    • Monthly processing of vehicle trip reports (IVDR’s for 23 units), fuel and toll data utilizing our fleet tax reporting system
    • Filing of Quarterly IFTA Returns
    • Filing of KY, NM and NY Weight Distance Tax Returns
    • Filing of 2290 HVUT returns. Worked directly with Owner Operators to file their 2290 HVUT and when necessary assisted them in acquiring an Employer Identification Number (EIN).
  • Regularly consulted with Joes Trucking Company (both the company accountant and their safety and compliance manager) to help ensure their compliance and awareness of their responsibilities.

If you’re looking at the above list and thinking that’s a substantial amount of work, you’d be right. Countless hours are spent to ensure a trucking company is compliant and functioning to the best of its ability. We certainly are not complaining as we were fairly compensated for our time. But just how much income did we earn from Joes Trucking Company during the year. 40,000? $50,000?

The actual cost of our services was $19,847 for the calendar year 2016. Don’t get me wrong, this is a substantial amount of money. But let’s compare that to the total costs of hiring a knowledgeable, trained employee capable of managing all of these tasks while also ensuring each compliance matter is audit proof. And not just any employee but one with a collective 55 years of regulatory compliance knowledge and expertise. Can such a person be hired and compensated only $20,000 a year? We certainly dont think so. 

Evaluate your situation and weigh your options

Many trucking companies are constantly putting out fires when it comes to compliance, only giving it attention when its about to or already has burnt them. It’s easy to forget just how much work goes on behind the scenes to keep a fleet of vehicles running safely and compliant. A company owner who delegates tasks to their employees may only see the invoices coming in and not the countless phone calls, emails and consulting that keeps their fleet compliant throughout the course of a year.

If your fleet is experiencing turnover, if you are looking to lower your fleets overall costs or if you’re wanting to feel confident that your vehicles are operating fully compliant with your permitting and tax responsibilities, perhaps you should give outsourcing a chance. The streamlined processes, expertise and cost savings you can acquire may surprise you. Contact Us To Learn More