How do I confirm a mobile shredding fleet’s fuel and route costs are realistic?
Rebuild the costs from the ground up: take route sheets, truck logs and fuel receipts, work out what each route really consumes, and compare that to the figures in the books. If the owner’s numbers sit well below what the paperwork implies, ask why before you rely on them.
Begin with the fuel receipts and the truck logs. Match fill-ups to the routes driven, and check that the totals line up with the books. Ask whether the owner pays by card, fuel account or cash, since cash can leave a thin trail.
Next, look at the routes themselves. A route that looks short on a map may take long because of stops, loading and waiting at customer sites. Ask for the time per stop and compare it with driver hours paid. If routes were recently shortened or merged, ask whether service suffered.
Then look at everything that moves with the trucks: repairs, tires, maintenance, insurance, driver pay and the cost of a replacement truck. Separate the costs that rise with distance from those that stay put. Your accountant can help you sort fixed from variable, and show what happens if fuel costs move. Last, ask for a ride-along and a look at the oldest truck. Equipment near the end of its life may flatter today’s costs. Write down every assumption you make when you rebuild the numbers, so your accountant can challenge each one and you can see which of them moves the result.
Key takeaways
- Match fuel receipts and truck logs to route sheets and to the books.
- Separate costs that rise with distance from those that stay fixed.
- Ride along on a route to see stop times and the condition of the oldest truck.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are fixed costs?
- 03Business Development Bank of CanadaGovernmentWhat are variable costs?
- 04Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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