The captain of a megayacht must have many skills, not the least being an ability to manage the yacht’s money.
As a rule of thumb, the annual running costs of a large yacht can be as much as 10 percent of its capital value. Clearly, therefore, there is a great deal of money involved in the operation of these yachts and, in fact, they are small businesses in their own right. A captain who understands this and recognizes his position as “managing director” is halfway there.
Owners expect their captains to be accountable, to exert rigorous financial control and to provide them with information at any time. Any captain unable to do this will find his relationship with the owner deteriorating rapidly.
Establish financial policy
When taking on a new yacht, the captain should seek a meeting with the owner or the owner’s representative to establish the yacht’s financial policy. It is absolutely crucial that the captain establishes precisely how the owner wishes his yacht to be run from a financial point of view.
The captain should make detailed notes of all matters discussed and prepare a memo (or minutes if it is a formal meeting), then ensure that the owner agrees with the content. This is particularly important for the first meeting.
It would be useful to prepare a Financial Policy Manual (FPM) that would include sections on such things as signing authorities, books to be kept, reports to be submitted, lines of responsibilities (especially if there is a shore manager) and how wages and bonuses are to be calculated.
There are many other considerations to be taken into account. For example, will the owner wish to pay the costs as and when they arise, or would he prefer to fund the vessel with a lump sum paid into an account accessible by the captain? In most cases, the arrangement will be somewhere between these two extremes. The decision should be recorded in the FPM.
The captain’s FPM should be his “financial log.” If ever there was a dispute or, heaven forbid, he ended up in court, a well maintained FPM would be invaluable for his defense.
Make sure roles are clear
Many megayachts have a shore-based manager, and a new captain must ensure that their respective responsibilities are clearly defined. It is important that the captain assert his position as captain to avoid any unseemly bickering later. This is one thing guaranteed to infuriate an owner.
It will also be necessary to establish to what extent the captain is free to act on his own initiative and the areas where the owner wishes the captain to consult shore managers before making decisions.
The best way to ensure that the shore manager and the captain work well and efficiently together is to be sure that their relationship is complimentary not competitive. These matters should all be recorded in the FPM and, where appropriate, copied to the owner.
Press the owner for a schedule
The captain needs to discuss the sailing program with the owner. This may seem obvious but it is sometimes neglected.
It is important to establish, as best one can, what plans the owner has for the vessel for the coming year.
Having established what the owner wants for his personal use, the captain then needs to establish the owner’s intentions in relation to the yacht’s down time. When the vessel is not in use by the owner should the captain seek charters? Where should the yacht spend its time and, when not in use, how far do the owner’s wishes go in relation to maintenance, refitting and updating of equipment?
Having decided his itinerary for the year, the captain should draft this out into a form that is a combination of a calendar and text with diagrams as necessary, so that this basic plan will be clear to all, including a shore manager, the professionals running the owning company and perhaps the engineer. The agreed itinerary should then be noted in the FPM.
Having established the financial policy, the captain must then move to preparing budgets and cash flow forecasts.
This article was originally published on the http://thetriton.com and is republished on behalf of the copyright holder.
Philbert Xavier Jenkins wrote this article on behalf of marine surveys