Managing your company’s fleet vehicles.
By Paul Fincham
Employee vehicles can be the largest cost center expense for any SME. For those responsible for managing your company’s fleet vehicles the pressure to cut costs in this area are high. With this in mind, financing of vehicles as well as the overall management of them (including tax, fleet insurance, maintenance and running costs) should be carefully considered.
- Leasing or ownership? These days there are more options available, and often the benefits of leasing or Contract Hire can outweigh those of car ownership. Ensure your lease agreements are flexible. Don’t get tied in to a lengthy unbreakable contract. Short term leases are ideal for an ever-changing team of field sales specialists or freelancers. You should also check that you can return vehicles or exchange for the latest models without penalties or additional costs. A flexible leasing plan allows you to plan ahead financially without any unexpected maintenance bills.
- Contract Hire. As another alternative Contract Hire allows you to hire a fleet at a fixed monthly rate based on different terms such as an agreed annual mileage, and return condition of the car. This type of finance means you can benefit from a fleet of cars that might otherwise be out of your reach. If you were to lease a vehicle it is sold at the end of the lease to a third party and you as lessee will be credited with a percentage of the sale proceeds. Therefore by leasing your vehicles you take some of the risks of ownership (because you get a cut of the final sale) but this is not the case with contact hire. With contract hire the hiring company will also normally pay maintenance and road tax.
- Make the most of tax savings. The lower your CO2 emissions from the vehicles you implement in your fleet, the lower your tax payments. Choose your fleet vehicles carefully or offer a limited option with low CO2 emissions to employees on salary sacrifice schemes. As well as making savings on fuel and road tax costs, you can also benefit from cheaper fleet insurance deals by adopting a fleet of green cars. Some insurers will offer lower fleet insurance premiums to environmentally friendly car owners. It is worth checking with a specialist fleet insurance broker to find out what savings you can make in this area.
- Always consider the lifetime cost of the vehicle, not just the upfront cost. Fuel efficient, reliable, and low insurance alternatives could save you a large amount in the long run. Consider running and servicing costs, calculating whole-life costs are critical to SMEs securing financial savings and should be fully considered as a basis for vehicle selection.
- Consider outsourcing your fleet management to experts in the fleet management market. Their expertise and contacts could save you time, money and unavailable resource.
- A vehicle management system can help you to understand the true cost of your vehicles and how efficiently they are running. Provided you have the resource to analyse the data drawn from this you can make some intelligent, fact-based business decisions.
- By adopting company fuel cards you can help you to centralize and control fuel costs as well as giving you true insight into expenditure and driving patterns. Fuel cards are aligned to a specific petrol company and mean that drivers can get their fuel without paying upfront and the employer will pay the bill centrally, usually on a monthly basis.
- Reduce claims costs. Repair bills, injury claims and uninsured losses can significantly impact on the cost of an accident. The cost of vehicle repair and maintenance and downtime is costing SMEs thousands. Utilizing a knowledgeable and trusted insurance broker could save you a fortune in the event of an accident. Third party claims can be heavily impacted by the speed the claim is reported. Small actions such as providing each driver with an incident pack will help get things moving swiftly. Working with a broker who adopts a proactive claims service and who actively chases their insurers to conclude claims can help to mitigate your losses and drive down future costs.
- Service your vehicles regularly. When your fleet vehicles aren’t serviced correctly further problems can occur and the cost, including downtime, can be significant.
- Invest in driver training. Nearly half of all fleets have incidents involving repeat offenders. Training focuses on improving driver behavior, fuel efficiency and aspects such as heavy loading, driving in different conditions, reducing vehicle speed, maintaining a safe distance from other vehicles, concentration techniques and hazard perception should be a regular occurrence.
Paul has 24 years’ experience in the motor insurance industry and has a wealth of knowledge having started within regional broking as an account executive for ten years prior to moving into Underwriting with AXA, LV & Andeva Underwriting Agency Ltd. As Motor Fleet Broker for Bluedrop Services, Paul specializes in Motor Fleet Insurance and offers advice and support to customers managing Motor Fleets.