Car Rental Software - Ultimate Guide (8): Reporting

In part 7 we discussed the phases of car rental in which the money is made, namely (i) the purchase, (ii) the rental and (iii) the sale. The common thread was that you, as a car rental organisation, need a consistent strategy and should align your purchasing, sales and rental pricing policies with it. Based on the actual results, you then make well-founded adjustments.

We noted that your car rental software should support you in this by being able to record all relevant financial matters and then turn them into insightful, clear reports. In this part we explain how.

Objectives

Reports are of no use if you only use them to look at. You need to turn the data into usable information.

That only works, however, when the reports show relevant data in a logical way. In various car rental software packages we have seen nice charts that you can do nothing with at all. In other car rental software, you first had to extract the data from the database and then process it before you could get any relevant information out of it.

Good car rental software, however, takes into account the information you need in your rental organisation. At a minimum, the following information should be obtainable:

• 1. Insight into utilisation rate (per vehicle): Overview of Under- and Over-utilised Vehicles.
• 1. Insight into revenue at a detailed level (per vehicle): Return on Base rental, Insurance, Mileage packages and Extras
• 1. Insight into costs at a detailed level (per vehicle): Depreciation costs, Lease costs, Damage, Transport costs, Fuel costs not recharged and Unrecoverable Fines.
• 1. Insight into profitability (per vehicle): Overview of Actual Return

Recording Data

In Part 5 – Fleet Management we described which items need to be recordable in order to arrive at good financial analyses. We summarise them below.

Recording Income

Recording income is the easiest part, since it happens automatically during the rental process. After all, the customer places a reservation for a vehicle with any extras and – to put it bluntly – ultimately pays the rental amount and any extras.

Based on the recorded rental income, the car rental software produces a report that distinguishes between the base rental, charges for excess reduction (insurance), mileage packages and all other extras.

So you do not really need to think about recording income. That is different, however, if you rent from multiple locations. In that case you may need to set up the system differently (or have it set up differently) to make income per location visible. Whether you work with a 'shared fleet' or a 'fixed fleet' also plays a role here.

It is important, incidentally, to consult someone from the finance department before you start setting up your new car rental software. Some accountants want to link each type of income to a separate ledger account, while other accountants lump all income together and refer to the reports for data analysis.

Recording Costs

Recording costs requires a bigger role from the rental organisation's staff. Items such as the purchase price, monthly depreciation and other recurring costs, damage that has been recovered, fines and fuel costs need to be recorded to get a good overview of costs. Although recurring costs only need to be entered once, incidental costs often have to be recorded manually.

When recording costs, too, you need to pay extra attention to how the rental system is set up if you have multiple locations, and we strongly recommend reviewing this together with your accountant.

Reports

Data can be presented in many ways, and we distinguish between (i) Charts, (ii) Tables and (iii) Raw Data.

i. Charts

People are generally visually minded, so a display in chart form is often requested. We like charts too, but generally speaking this way of presenting yields the least concrete information.

Charts are, however, useful for getting a general impression of a vehicle's performance at a glance. In a chart you can quickly see, for example, in which months the vehicle generates a lot of revenue and in which months less.

ii. Tables

For a more detailed analysis you need a data view in table form, as below. Using the actual figures you can check precisely whether, for example, your vehicle achieved a positive return in a given month or not.

We therefore believe that a table view is essential for reporting in car rental software. Ideally, you can filter and sort this data easily.

iii. Raw Data

The purest form of data is the raw data that you can pull directly from the source – read: the underlying database. For the advanced data analyst this can be desirable for carrying out more in-depth analyses.

Get Started!

Many car rental companies spend little time on data analysis. That is a shame, because your data is a goldmine. With limited effort (assuming you have good car rental software), you can extract a huge amount of information from your data, such as answers to the following questions:

• Utilisation: Which vehicle types do I not have enough of yet (over-utilisation) and which vehicle types should I perhaps dispose of (under-utilisation);
• Revenue per category: Are my staff selling enough extras and accessories?
• ROI: On which vehicles do I earn the most money?
• Kill your Darlings: Which vehicle types should I stop offering?
• Kill your Darlings 2: Which accessories should I stop offering?
• Discounts: Is too much discount being given?
• Conversion optimisation: When should I offer which extras and accessories in the rental process?
• Rates: When am I too expensive and when too cheap?
• And much more…

Get to work with it. Pick one question and try to give it a clear answer. We recommend first formulating a research question: 'I make money on my advertising vehicles' and then confirming or refuting it using the data.

_Let's assume that you are currently not making a positive return on advertising vehicles. _

The next step is to come up with something that will make you a profit on advertising vehicles. Formulate a hypothesis and carry it out. An obvious option is to raise the rental price. But that will only work if your utilisation rate is high. If your utilisation rate is disappointing, it makes more sense to sell a number of advertising vehicles.

Right, and then…?

Advanced: Keep Adjusting

Data is dynamic. When you change something in your organisation – such as a higher rental price – this ultimately affects the bottom line too.

Regardless of the outcome, your experiment is always a success. Higher profit? Great, good decision. Lower profit? Also great, you have refuted your hypothesis.

The next step is to set up a new experiment: Suppose I halve the price of my advertising vehicles... Do I then get 1.5 times as many customers? Knowing that every customer who rents an advertising vehicle comes back on average another 2 times for a different vehicle type, that would ultimately be positive.

Execute, analyse and then adjust. And again…!

Closing

In this part we have set out why good reporting matters. By setting up your car rental software properly and recording everything, you enable good car rental software to present the most important data to you clearly. You can then draw information from it.

It is then up to you to do something with the data and information. Step 1: Analyse your rental business using the data. Step 2: Formulate a new hypothesis and experiment. Step 3: Back to step 2!

Hopefully this part has given you new insights to improve your results, and you understand how your car rental software should contribute to that.

In the next part we zoom in on the possibilities of rental software by looking at the technical aspects of good car rental software. There we focus on the connection with the website (API).