As your fleet-based business grows, relying on your or your employees’ personal vehicles to get the job done just won’t cut it. Not to mention, due to vicarious liability, you could be held responsible if one of your drivers got into an accident in their personal vehicle while driving from one job site to the next.
With that in mind, it’s time to add (or add more) corporate fleet vehicles into your operations.
But because fleet vehicles are the backbone of your business, you don’t want to make any rash decisions. That’s why it’s important to include vehicle acquisition and operations management as part of your workflow.
Neglect these crucial factors and you could cripple your business — or, at least, make your job as a fleet manager a whole lot harder.
In this article, we’ll let you in on what you need to know about acquiring and operating corporate fleet vehicles to better manage your business.
Acquiring Corporate Fleet Vehicles
Choose Between Buying And Leasing
Your fleet-based business is taking off, but there’s just one problem: you don’t have enough vehicles to handle the growth. It’s time to change that.
The first step in acquiring a new corporate fleet vehicle is deciding between buying or leasing. Both processes come with their own benefits and drawbacks.
The benefits of leasing include:
- Lower initial costs (you don’t have to pay the full purchase price of the vehicle upfront)
- Reduced tax burden (because you don’t own the vehicle outright)
- Lower labor costs (maintenance and repairs are handled by the dealer)
The drawbacks of leasing include:
- Lack of ownership at the end of the lease
- Interest payments that can make the vehicle more expensive overall
- Higher insurance rates
The benefits of buying include:
- Freedom from mileage limitations
- No lease length to contend with
- Tax depreciation
- More control over vehicle lifespan
The drawbacks of buying include:
- Large upfront expense
- Business pays interest on the total cost of the vehicle
- Future value of the fleet vehicle isn’t guaranteed
Pro Tip: Examine your fleet’s financial position — current cash on hand and projected future income — and choose the option that allows you to put enough drivers on the road to cover the work that needs to be done without causing fleet-related expenses to skyrocket.
Perform A Cost Analysis
Corporate fleet vehicles include two costs: the sticker price and the operational price. The sticker price is what you pay to put the vehicle on the road. The operational price is what you pay to keep it there.
How can you figure out what the operational price of a specific vehicle will be? By running a total cost of ownership (TCO) analysis.
This type of analysis will help you determine the true cost — above and beyond just the purchase price — of putting a vehicle into service and keeping it there long-term.
Calculate the total cost of ownership with the following formula:
Total Cost Of Ownership = Fixed Vehicle Costs + Variable Vehicle Costs
Your fixed vehicle costs include necessary payments such as monthly lease or loan expenses, insurance, and permits. Your variable vehicle costs include monthly fuel bills, tolls, maintenance, and repairs.
Before you crunch any numbers, make sure all the data is from the same time period (i.e., the same quarter, month, or week). You don’t want to mix fixed vehicle costs from July with variable vehicle costs from a single week in July.
This is where fleet technology can really come in handy. Integrated tools such as fleet management software, telematics, and smart fuel cards (more on these later) can help you keep your data organized so that it’s easy to see your up-to-date vehicle costs.
If you already have a fleet vehicle in service that’s similar to the one you’re thinking about acquiring, use the existing data from the vehicle you own in your new TCO formula to make the calculation as accurate as possible.
Pro Tip: Use the TCO as a benchmark to figure out the pricing for your services so that the income from each job supports the activities of your vehicles and drivers.
Managing Corporate Fleet Vehicle Operations
After you acquire your new corporate fleet vehicles, it’s time to focus on managing and optimizing on-the-road activities so you can streamline your fleet operations and keep things running smoothly.
Here are some suggestions for managing corporate fleet vehicles efficiently and effectively.
Implement The Right Technology
Gone are the days of manually logging data and planning routes. It’s no longer efficient (nor effective) to manage your fleet with paper or basic computer programs.
Modern software gives you more accurate control over the use of each asset and the expenses associated with their operation. Core technologies that can help you coordinate fleet activities include:
- Fleet management software
- Telematics
- Smart fuel cards
Fleet management software gives you access to a wide variety of data and tools — including hours of service tracking, GPS, route analysis, and safety information — that provide insight into ways you can reduce the costs associated with each vehicle (and the entire fleet).
Telematics gives you access to detailed information about each vehicle and helps you predict when it’s time for vehicle maintenance or replacement, monitor driving behaviors to stop unsafe habits and wasted time, and simplify compliance reporting.
Smart fuel cards give you access to powerful tools that help you control one of the largest spend categories your fleet-based business has to contend with.
Pro Tip: Use a modern smart fuel card to set spending limits on fuel, parking, maintenance, and supplies so that drivers don’t overspend while on the road.
Control Fuel Use And Cost
If your drivers (and your wallet) complain about having to pay higher prices or travel out of their way for fuel because they’re restricted to certain brands and stations, a modern fleet and fuel card is the solution.
These cards give drivers the freedom to fill up at whatever stations offer the lowest prices. Add to that other money-saving features — including discounts, rewards, and rebates — and you’ll be able to lower your fuel bill significantly.
Pro Tip: Choose a smart fuel card, like the Coast fleet and fuel card, to reduce your fuel bills and make tracking spend, issuing cards, and closing your books easier and faster than before.
For ideas about cost-saving strategies for your business, check out this article from the Coast blog: 8 Fuel Management Strategies To Keep Your Fleet Running Smoothly.
Optimize Routes
Does this sound familiar? Your drivers are taking the shortest routes to their destinations, but fuel costs are still cutting into your bottom line.
What should you do? Use fleet management software to analyze routes so you can optimize them.
After analyzing the data, you may discover that a slightly longer route between point A and point B is more cost-effective because vehicles aren’t getting stuck in traffic and idling for excessive amounts of time.
Pro Tip: Analyze traffic along preferred routes and arrange for appointments and deliveries to coincide with times of least congestion. That way, your vehicles aren’t wasting fuel and time sitting in gridlock.
Maintain Compliance
Fleet compliance includes everything your business is required to do to ensure that the operation abides by local laws and regulations.
For trucks and vans, this usually means the standards set for commercial vehicles by the federal Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA).
Fleet management software helps you monitor drivers’ hours-of-service (HOS), vehicle weight, vehicle length, safety, and a variety of other metrics so your assets don’t get removed from service for violating local, state, or federal guidelines.
Pro Tip: Use fleet management software to help drivers record miles driven, the amount of fuel purchased, and the location where it was purchased so your business can stay in compliance with the International Fuel Tax Association (IFTA).
Train Drivers To Improve
Data from technology like fleet management software, telematics, and fuel card software can offer insights on how your drivers can operate their vehicles in a more economical manner.
For example, telematics data may reveal that a driver is accelerating and braking harder than necessary and thereby using more fuel and putting undue stress on the vehicle.
Pro Tip: Use fleet management analytics to develop training programs that reduce fuel costs and prevent breakdowns.
Right-Size The Fleet
Running vehicles that are too big for the job and having too many vehicles in your fleet are the quickest ways to overspend your budget.
If your technicians and drivers can do the same job with a Ford Ranger instead of a Ford F150 (for example), you’ll save money by downsizing to something with better MPGs.
And don’t forget about the vehicles just sitting in your parking lot. The lease or loan payments, registration fees, and permits for those are wasted resources. Selling off unused vehicles can save you thousands of dollars annually that you can put toward other fleet activities.
Pro Tip: Talk to your drivers about what they need from their vehicles to find the size that works best for everyone. Then analyze data from fleet management software, telematics, and fuel card software to identify vehicles that are sitting idle on the lot.
Corporate Fleet Vehicle Management Made Easier
Regardless of the size or makeup of your fleet, the Coast fleet and fuel card can help simplify and optimize your corporate fleet vehicle management.
With Coast, you can:
- Centralize fleet fuel and maintenance expenses on a single card
- Take advantage of open-loop capabilities
- Benefit from real-time reporting
- Receive automatic activity alerts
- Rely on advanced security features
- Accurately track costs
- Protect against fraud
- Integrate with other common fleet technology
- And much more
And, with paperless receipts, you won’t have to worry about lost transactions ever again. Coast makes it easy to collect spending records in seconds directly from your drivers’ phones.
For example, Greene Worldwide Transportation (GWT) experienced limited reporting capabilities with their previous fleet card. But with Coast, GWT has experienced a significant improvement in its fleet management processes.
Jeff Greene, the founder and president of GWT, had this to say: “After going back and looking and checking, we actually terminated one of the drivers because it became very obvious that he was trying to bypass the system. But the security measures in place with Coast alerted us and made it virtually impossible for him to misuse the card.”
For more information on how Coast can help your business control fleet costs and streamline fleet operations, visit CoastPay.com today.
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