Ways Your Organization Can Manage Fleet-Related Expenses
Establishing your key performance indicators, otherwise known as KPI’s, is essential to ensure your fleet performs effectively. You can collect them from your vehicle assets and the fleet organization. Collecting this data lets you analyse trends over time and ultimately find ways of cutting costs.
Transportation comes with a risk of fraud. For instance, a driver might claim that one of your employees hit their vehicle. Or they might get in an accident on purpose to try to extract money from your organization. Insurance and accident fraud run’s rampant in today’s society, especially when vehicles of any type are involved. Do you recall those “how is my driving?” stickers that we see on the back of commercial trucks and semi’s? There is a reason for those. Technology like dash cams let drivers show they were innocent, proving liability…or the lack thereof. You can use the information to help law enforcement officials understand the crash’s circumstances. They offer you more control over your fleet’s safety since the features can increase visibility and reduce accidents, ensuring smooth roads ahead.
You can also use cameras in the cab to protect your drivers and ensure compliance with the organization’s policies. For instance, you obviously don’t allow your drivers to use phones while driving, and dash cams can help ensure your employees follow these rules. Or the camera could show what drivers did before an accident, showing if anything they did impact the outcome.
Lastly, there is the aspect of the ever present blind spot on nearly all large commercial vehicles. Try as you might, there are simply areas around large trucks that remain unseen by the driver. Dash cams allow for additional visibility when backing up the truck, as well as in poor weather conditions. These trucks can do seriously property damage or worse, bodily harm or injury, when not driven properly.
Executives at your company may feel that frequently replacing your vehicles is an unnecessary cost and encourage you to keep them until they are practically ancient. However, it’s easy to keep vehicles past the optimal economic life. That means you’ll end up spending more on maintenance and fuel since the car or truck will no longer run as efficiently.
Reducing your vehicles’ lifecycle costs means you need to understand how to optimize the cycle of replacing older cars or trucks. The best organizations use planning tools so they can economically see the ideal lifecycle for replacing their truck or car. When considering the relevant costs, such as the resale value, cost of a new car, projected repair, and planned maintenance, you can create both long-term and short-term replacement plans. Also, companies should understand that while vehicle replacement costs are a negative impact to free cashflow, they are essentially a zero impact to EBITDA. This important financial metric is also known as Earnings Before Interest Taxes Depreciation & Amortization. While routine and expensive maintenance costs degrade an organizations EBITDA targets, replacement vehicles are capitalized and held on the balance sheet.
It’s crucial to manage depreciation so you can sell the vehicle at the optimal place. Many corporations sell some vehicles to employees. You will often see companies who recycle their rental inventory, and sell their fleet to companies, employees, or 3rd party individuals alike. The advantages of selling company cars to your employees include:
- Transportation and auction fee savings
- Higher resale value
- Faster receipt of the money
- Better care is taken of the vehicle
It’s best to have tools in place, so you stop your drivers from spending on cosmetic repairs, so you do not diminish the savings. Other ways of increasing the final sale value include selecting colours that give you the best return. So, you’ll want to choose neutral colours instead of bright ones. When you have a potential buyer, offer the maintenance records to show the vehicle was well cared for. Try to reduce the cost of the sale as well. For instance, you won’t want to do any repairs unless it requires a bit of cleaning. When you manage the transportation or auction fees, you might gain several hundred dollars on the sale. Look through industry-related information to benchmark your sales.