Cutting transport costs

Cutting transport costs through better fleet management - As Britain slowly emerges from one of the worst recessions in living memory, the key focus for most companies is still cost control. Nowhere is this more apparent than in the area of company fleets. Cars, vans and trucks will remain as indispensible business tools for the foreseeable future, but they are expensive assets. When it comes to vehicle finance, the majority of companies will look to lease rather than buying outright and here’s why: Leasing is a fixed-cost form of motoring. For a set monthly payment, you get the use of a car or van for an agreed duration and mileage that suits your business. It eliminates most of the risks associated with vehicle ownership. In a contract hire deal (the most popular form of vehicle leasing), you return the van or car to the leasing company at the end of the contract period, and they take the residual value risk. Leasing should result in a smaller VAT bill for cars. You only pay it on the rental fee, whereas a purchaser pays it on the full car price. In both cases VAT is 100% reclaimable on the cost of a vehicle when it is solely used for business. However, the situation is different if a car is also used privately. While a contract hire customer can still reclaim 50% of the VAT charged on the finance cost of such a vehicle, a purchaser can reclaim nothing. Leasing a vehicle instead of purchasing it means you are not tying up capital in a rapidly depreciating asset. You can invest the money that you are not paying upfront in growing your business or reducing debts. Leasing companies are used to buying thousands of vehicles each year and can negotiate great deals with manufacturers - passing the savings on to you in the form of a very competitive leasing rate. There are a host of other costs associated with running and operating a company fleet. Transport is not a core business function and many companies will not have much in the way of in-house expertise. In these circumstances many organisations find that using an external fleet management provider can help. These suppliers can provide a range of products and services, including accident management, repair management and vehicle administration. Fleet management companies can deliver cost reductions through their bulk buying power and the supply of detailed reporting that can identify further savings in areas like fuel and maintenance costs.

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