What you need to know about fleet vehicles for your business
It’s an exciting time when you see your business begin to grow. You’re delivering more products, or gaining new customers daily and your sales team is growing. So, you may find yourself considering whether it’s time to purchase or lease a fleet of vehicles.
In the past, you would only be eligible for fleet packaging if you were proposing to buy 10 or more vehicles. Thankfully now that’s changed, and you can very often find more flexible fleet programs for just a few cars.
As with any business decision, there are pros and cons to purchasing or leasing fleet vehicles for your business. There are also risks. But as with anything, as long as you know all the risks up front, you can make a more calculated decision on whether those risks are worth it.
Your capital is locked-in
Businesses, especially young ones, can rise and fall like the waves. One minute you’re up and then you can be down – especially when your business is reliant on invoices being paid on time. And if you happen to be in a down moment, you may find yourself with cash flow difficulties and all your spare capital already invested in procuring vehicles. This is something your accountant or financial director can help you manage, so make sure you work closely with them in the planning stages.
As with a privately-owned car, there’s no guarantee that you’ll be able to resell it at a profit – or even just a decent price – for your company. And like anything, if you hold on to it too long, chances are it’s going to start costing you money. If this is something you’re concerned about, it may be a good idea to consider leasing over buying. A lot of fleet companies now can help you to re-sell the vehicle at the end of the lease which takes the pressure off.
High running costs
Purchasing a fleet of vehicles, no matter how big or small, comes at a substantial expense. The cost of buying or leasing the vehicle is just the beginning, followed by the running and vehicle maintenance. And then there’s the possibility of hiring someone or bringing in an existing employee to manage the fleet for you – taking care of all the maintenance, cleaning and repairs.
High insurance costs
We have to insure our private vehicles and fleet vehicles are exactly the same, except it’s not the individual who insures them, it’s the company. As with any moving vehicle there’s a risk of accidents and if your team have to drive a lot of kms, the risks increase. Therefore, the company will need to protect itself from any accident liability with comprehensive insurance policies; which inevitably cost money.
There are also many perks to fleet vehicles and that on hand convenience for your employees is great. Unlike rentals, you can store the vehicles on premises indefinitely and if you want to, you can plaster them with your company logos. As long as your business really does have the volume of driving and staff that justify a fleet vehicle, then it’s a great option.