Operations

Aventura CFO & NLA President Ron Sorci Offers Cost Control Tips

LCT Staff
Posted on February 18, 2009

LAS VEGAS — Ron Sorci, CFO for Aventura Worldwide Transportation Services in Miami and newly elected NLA president, offered valuable guidelines for managing fleet funding and controlling operating costs last month during the International LCT Show.

Controlling fleet finance and other costs will help you keep costs of good sold no higher than 65%, and general and administrative expenses capped at 25%, bringing you at least a 10% profit margin, which should be your goal, Sorci says.

Here are some financial management practices Sorci says you should think about:

1. When having a banker meeting, make sure you put together a thorough financial report with corporate tax returns, balance sheets, budgets and forecasts, and client reference letters.

2. Be careful about the type of lease you take and its mileage restrictions. You will have lower monthly payments with leases, and traditional loans usually require a 10% fee and sales tax paid upfront. But high mileage cars under leases can get quite expensive if not negotiated realistically.

3. With auto resale values plummeting down, open end leases are now riskier, so be careful and also look at closed-end leases.

4. TRAC leases are especially cost effective when taking a typical seven year loan for motorcoaches.

5. Maintain relationships with more than one bank, which comes into play when negotiating to reduce rates. You need to mention you’re getting a better rate elsewhere.

6. Use your financial reports to constantly analyze your costs and pinpoint where you can reduce them.

7. It’s important to look at the details: for tolls and parking tickets, airport and port fees, two way radios and beepers, and uniform expenses, determine who’s paying it and discuss them with independent contractors and chauffeurs.

8. Consider trading out rides to cover the cost of advertising and promotions.

9. Consider offering comp rides to administrative assistants to corporate clients, as this person might not be able to afford an airport ride in a Town Car and would appreciate the experience.

10. Think about offering higher commission percentages for referral sources; a hotel contact sending you $600,000 in business might be pleased to receive 25% as a commission.

11. Asking clients to pay you monthly by check can save you much in credit card charges.

12. Make sure reservationists know how to clearly and correctly answer customer questions on surcharges.

COMING UP: See more of Ron Sorci's seminar in the April issue of LCT Magazine.

Source: Jon LeSage, LCT Magazine

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