Cost management has always been a challenge for fleet providers. Between increasing taxes, maintenance costs, and insurance premiums, it can be tough to get your finances under control. That said, here are some ways to help you minimise fleet costs and ensure your company’s long-term survival.
Explore funding alternatives
Changes in costs and market preferences can mean some financial strategies you selected years ago may not be effective anymore. That said, there are ways to reclaim financial stability within your organization.
Consider replacing ownership or reimbursement arrangements with fleet leasing. You can easily lease vehicles with zero down payment and lower upfront costs. If you own a number of vehicles but need capital, you might want to sell and then lease them back. Doing so can provide you with necessary funds.
Manage your assets
Examining your daily utilization rates can help assess the number of vehicles necessary to keep your business afloat. Consider selling any surplus vehicles especially unused or older ones. Check fleet remarketing trends to determine the optimal time to sell.
Older models may not trigger depreciation expenses, but may bring higher repair costs, and lower resale value over time. That’s why it’s vital to pinpoint the best time for when each vehicle should be replaced.
When purchasing new vehicles, consider factory ordering from a single supplier instead of buying from various dealers. This will not only ensure quality, but can also lead to substantial savings. Plus, newer vehicles offer more safety features, which means they’re less likely to cause unplanned downtime.
Monitor fuel consumption
There are various reasons why most fleet managers exceed their fuel budget. These include road work, poor route planning, traffic congestion, and improper driver behavior. Regardless, excessive fuel consumption can take a major hit on your finances.
When it comes to cutting fuel costs, data is key. Installing tracking tools in fleet vehicles allows you to monitor idle hours and hold drivers accountable. What’s more, these technologies are designed to improve route and load planning, which can reduce fuel wastage. Similarly, automated fuel management systems will help you track accumulated fuel costs and individual transactions and prevent cases of fuel fraud.
Crashes and injuries are expensive for everyone involved. Implementing an effective safety management program won’t only protect employee well-being, but also reduce the risk of accidents. This in turn, can keep medical and insurance costs down.
The insurance premiums your company pays depend on several internal factors such as your fleet’s overall safety. Fleet insurance agencies require a spotless record which means no reckless driving, DUIs, and other improper behavior. Ensuring your vehicles are well-maintained and your drivers trained on safety regulations will help you save up on insurance costs.
Additionally, you can compute lost profits due to fleet crashes by dividing crash costs by your operating profit margin. The result is the extra sales revenue you need to mitigate losses.
As with any business, owning a fleet company can be a rewarding venture as long as you plan ahead. Focus on reducing overheads and keep avoidable expenses to a minimum. Understanding where and how money is being spent will help you make better financial decisions and ensure continuous growth.