By Elliott Woodhead, Federation of Small Businesses
Ask anyone in charge of fleet management and they’ll confirm the task can be time consuming, laborious and expensive if not handled correctly.
Yet the simple fact is, most companies rely on transportation to a certain degree so the effective management of company vehicles is key. To ensure the wheels really are always in motion it is crucial to minimise the risks associated with vehicle investment, improve efficiency, productivity and reduce overall transportation and staff costs.
When your business has grown to the point where you feel there is a need for one or more company vehicles, now is the time to seriously start considering how you manage your company vehicles as there are a few key things you really should consider:
How should I fund my fleet?
When researching whether to invest in a company vehicle, there are different options to consider: outright purchase, hire purchase and leasing. For many small businesses it makes sense to opt for a contract hire or a lease as full maintenance and total vehicle care is usually included in the deal to cover servicing, repairs, new tyres, insurance, etc. A top tip here is to ensure there is a ‘No Quibble’ policy on the tyre repairs so that your vehicle is always safe to drive. If you were to go for the leasing option, you can opt for a business lease or a personal lease.
How do I know which vehicle is right for my business?
Once you’ve decided on your vehicle funding option, you’ll need to ensure you get the best possible vehicle for the task in hand. Although many small business owners may consider the look and feel — and brand — of the vehicle to align with the business identity, there are many questions to ask yourself before making a decision on make and model:
• Unless the vehicle is entirely used for business purposes and is never used for private mileage, if the company is paying for your vehicle, your choice of car will determine how much tax you will need to pay on the vehicle as a “benefit in kind”. This is currently based primarily on emissions: the lower the emissions, the less tax you pay.
• What’s it going to be used for? Are you going to use the vehicle strictly for business or for your personal life as well? Make sure the vehicle you choose suits for work and personal purposes. It might make sense to make a list of all the things you will need it for — now and in the future.
• What does your lifestyle look like at the moment and is it likely to change within the next one or two years? If you’re planning a family and perhaps moving to the country, you might want a bigger car whereas if you’re living in the city centre, you might need something smaller.
• Are you going to put a lot of mileage on the vehicle? In that case, make sure that you choose something that is comfortable to drive and that has the features that you will need to get you the distance.
• What are your main objectives when it comes to your vehicle? A company car is still very much a status symbol in the UK and is often essential for attracting top talent. However, don’t forget that the employee will be taxed on the vehicle as a benefit, so do keep this in mind when selecting the car.
• Most of us need to use a vehicle in the course of running our business, but if it’s for deliveries and moving equipment you might need to consider a van or a more commercial vehicle. This may need to be modified in order to meet your specific business needs, or you may wish to have your company livery.
What’s required from a legal point of view?
Many small business owners worry about the legal aspects of having a company vehicle. There are two main aspects to this — is your company vehicle drive worthy (tyres need to be legal, it needs to have passed its MOT and be insured for business use, etc.) and are the employees (or contractors) driving the vehicle legal, for example, do they have valid UK driver licences, aren’t banned from driving, and are covered by the business insurance? Check that the person driving the vehicle knows what to do in case of an accident or breakdown. The key thing to remember here is that an employer needs to be able to prove that they have made a reasonable attempt at making sure their driver and the vehicle are legal. Otherwise you may be liable for costs and damages in case of an accident.
When is it time to bring in external help to manage your company vehicles?
When it comes to managing a company fleet research would suggest managers are getting in a spin!
According to new research by RAC Business Services, more than a fifth (23 per cent) of UK small business managers who are in charge of up to 50 vehicles confirm that they are struggling to cope with this task when you add into the mix the additional roles they have to perform. Stress levels reach boiling point with almost half (49 per cent) saying they were stressed and six per cent saying they were ‘very stressed’.
So what’s causing all the issues?
It would appear mounting paperwork and logistics are top of the list and on average, six hours a week is spent on admin by those in charge of looking after company cars and vans. However this figure rises to nearly nine hours for those in charge of between 10 to 50 vehicles which is a considerable chunk out of a working week if vehicle management is just part of the to-do list.
What tasks take up time?
The most common problems cited by managers when dealing with employees who use a company vehicle include:
• Dealing with fuel expenses
• Sorting out insurance
• Keeping track of vehicle use
When it comes to the most common problems managers face when dealing with company vehicles these range from:
• Arranging legal requirements (MOTs, tax, etc.)
• Sorting out insurance
• Vehicle wear and tear