Running a business fleet

Running a business fleet is a constant responsibility. Below, we look at the main things business owners should consider to get the most out of their fleet

A business fleet can play many roles on behalf of your business: delivering to customers, picking up supplies, picking up customers, accelerating national growth, an incentive for employees, and even acting as a branded marketing tool on the roads.

Nevertheless, running a business fleet can seem like a daunting prospect. After all, with temperamental vehicles and recurring costs, fleet management can be a near constant responsibility.

This article will cover the main considerations business owners will face when running a fleet, and answer some of your most pressing questions.

In this article you will learn:

To get an inside view on running a business fleet, we gathered the insights of Daniel Long, founder and managing director of on-demand waste removal service Clearabee:

“Managing a fleet can be a complex task. Fundamentally, it comes down to ensuring that it is running efficiently and safely, and delivering a great service.

“We run an on-demand service with same day waste collections, so when a job comes in, we allocate it to the best-placed team. We need to know exactly where each truck is at a given moment in time to do that.”


Creating a business fleet: What cars do you need?

The cars you choose to make up your fleet will depend on what the purpose of your fleet is.

Generally speaking, your company vehicles will either serve the needs of a specific task, or act as a perk to incentivise employees.

The former will require vehicles predicated on their function. For example, a small or large van will help you carry equipment or supplies, while a saloon would be better suited for taxi services or executive transport

The latter requires cars designed to appeal to your key talent. The sort of car someone might want to be seen in.

According to Long, reliability is vital when choosing vehicles for your fleet: “We replace vehicles once out of warranty because don’t want them wasting time in the workshop.

“This approach means we are minimising our carbon footprint, although we also offset 150% of our emissions through accredited schemes.”


Should you lease or buy your vehicles?

Leasing a fleet

Most businesses use contract hire. This means the leasing company takes on the risks associated with car ownership.

Don’t just go for the option with the lowest monthly quotes. Consider the reputation of the provider, and what sort of IT capability they offer. Because, as discussed below, a fleet management solution is essential to the smooth running of your fleet.

Many now do outsourced management, so you don’t have to worry about logistics. Almost all include service and maintenance in the costs.

The four main types of vehicle leasing are:

  • Business contract hire – you pay monthly payments over an agreed time. Cost includes depreciation of the vehicle. You just return it at the end of the contract with no further charges, as long as it is within the agreed mileage and not damaged
  • Business contract purchase – very similar to the above, but at the end of the contract you have the chance to return, keep or part exchange the vehicle for a new one or a new fleet
  • Hire purchase – you pay off the entire cost of the vehicle until the lease ends, at which point you are the registered owner. There are no additional charges for excess mileage or damage to the vehicle
  • Lease purchase – similar to business contract purchase, but you own the car at the end of the deal. You can’t return it, but can exchange for a new lease car

 

Buying a fleet

While more expensive, buying the cars for your fleet gives you full control of your vehicles and costs.

You should establish how much buying your cars will cost throughout their working life.

The three main areas of cost are:

  • Fuel
  • Deprecation and service
  • Maintenance and repair

More on this below.


Keeping costs low

There are many steps you can take to keep the costs of your fleet down. Here are our top tips.

Fuel

One of the most significant expenses when running a fleet is fuel. This can vary depending on the current price of petrol or diesel, and how the cars are used. Some simple rules:

  • Opt for low fuel economy vehicles
  • Measure fuel use and look for trends that impact cost
  • Train drivers to use vehicles economically
  • Keep tyres inflated

 

Fuel cards are another way to manage the spending of your fleet. Your drivers use them like credit cards to pay for their fuel, and then you settle the monthly bill.

Using fuel cards allows you to monitor how fuel is used by individual drivers. You can also restrict certain types of purchases.

Find out more about fuel cards here.

 

Insurance

Some cars and vans have a better insurance rating than others, so you can start off by researching and finding these vehicles.

Many insurance companies have specific fleet insurance policies which work out much cheaper than taking out individual policies on each vehicle. Some providers will even give you access to a nationwide network of repairers and legal assistance as standard.

Driver analysis software (discussed below) can be useful in the event of a claim.

Service, maintenance and repair

Leasing companies usually offer full maintenance packages at varying costs, depending on the type and model of vehicle.

These are a wise option as, due to their significant economies of scale, leasing companies can negotiate much more competitive deals than you could on your own.

Tax

The main types of insurance you’ll be paying for your fleet are:

  • Vehicle Excise Duty (VED) – the tax all drivers pay to use public roads in the UK. Determined by engine size or CO2 emissions. For Heavy Goods Vehicles (HGVs) this is determined by size and weight per axle
  • National Insurance Contributions (NICs) – determined by an annual percentage rate announced in the Budget (currently 13.8% for 2018/19, benefit-in-kind (BIK), based on CO2 emissions and fuel type) and the vehicle’s P11D value (the way HMRC tracks the benefits provided to employees in addition to salary)

Find out more about fleet management costs here.


Fleet management software

Fleet management software is a vital component of fleet management, helping you to keep track of your vehicles and monitor driver behaviour.

Clearabee uses software to make its vehicles run more efficiently: “We’ve used a vehicle tracking system with intelligent routing from the earliest days of the business, and as we’ve added more trucks and teams, this system has grown with us.

“We cover the whole country now, and each new truck allows us to reduce the time and distance travelled per job.”

For Long, safety is another key advantage of fleet management: “Managing risk and road safety is now probably the most important part of managing a fleet.

“We’ve recognised how important it is to recruit the right kind of driver and monitor and reward the right driving behaviours.

“We’ve done this by using driving analysis software, geofencing locations, and setting up mileage and service alerts.”

“We use a vehicle tracking and mobile workforce system from BigChange to do a lot of this stuff, and we’ve also started rolling out Spillard camera systems to increase safety and allow us to watch our trucks in real time.”

Find out more about fleet management software here.


Next steps

Running a business fleet requires hard work and diligence, but a well-managed fleet can reap great rewards for your business.

By carefully considering your business and its needs, you can assemble a fleet of vehicles that helps provide superior customer service and accelerates growth.

Click on the links to answer any of your burning questions about fleet management.