An introduction to the marketing
Despite high fuel costs and communications advances such as cheap tele-conferencing, most organisations still have a need for business travel. And in the UK, the majority of such travel is by car. From an employee’s perspective the company car remains a sought-after benefit, but for an employer they can be a financial, legal and administrative headache.
Over the last 40 years the UK fleet market has evolved into a huge, sophisticated industry that can be complex and intimidating to the uninitiated. And there’s no silver bullet: different approaches are likely to yield very different results dependent on circumstances. The objective of this guide is to help fleet decision makers get the best overall result for their business, whilst not forgetting employee aspirations or safety.
What is fleet?
Not all organisations recognise that by running cars and/or vans, they’re part of the overall fleet market. So they often overlook the benefits of a fleet approach and fail to explore the best ways to ensure their fleet remains both legal and cost-effective. For any cars used for business purposes think fleet.
Your fleet is unique
In the UK, entitlement to a company car doesn’t always mean the employee needs one to do their job: in many instances, it’s a perk. And every business is different: size, geographical spread, age and nature of the employees, products and services offered. Some employers are cost conscious and see cars as a tool of their trade, whilst others view cars as a means of attracting and rewarding the best employees. Many of the issues covered in this guide relate to cars that are owned by the employee and used for business. These cars may be purchased via a complex, structured arrangement set up by the employer or a simple cash allowance paid to the employee; they may be used only occasionally or spend every day plying the motorways. However they’re financed and used, the need for sound cost management and a clear understanding of the employer’s legal obligations, is essential.
Duty of care
Employers now have to include ‘driving at work’ within their Health & Safety policy. This duty of care is not restricted to drivers of company vehicles; employers have an obligation to protect every employee, including those who use their own vehicle for business purposes, as well as third parties, such as other drivers and pedestrians. There are many aspects to such a policy but the overriding objective is to produce an effective risk assessment / risk management policy that provides a framework for ensuring that a safe working culture is in place and is regularly reinforced.
When procuring vehicles, business users are faced with a complex range of options. Fleets can choose to let a leasing company manage the whole package, ask a management company to handle specific tasks such as accident management, or run the whole fleet ‘in-house’.
Suitable funding will then depend upon a number of factors, not least the organisation’s attitude to financial risk, as well as its tax and cash flow position. Other factors include fuel reimbursement, National Insurance and bolt-on services such as accident management. Vehicle list price or vehicle rental costs often have very little bearing on the total cost of running a fleet.
Getting the best advice
D. M. Keith Corporate, via this guide, seeks to provide a general background to the options available to fleets, with pointers to best practice and highlighting of some of the major pitfalls. Whilst some of these pitfalls are concerned with cost, others cover your drivers’ and general public safety. In case of doubt professional advice should always be sought.
Although many fleets are managed in a similar fashion, and encounter the same day-to-day issues, each fleet is unique in some way. Some organisations manage everything in-house, while others outsource almost every aspect of the fleet operation to external contractors or service providers.
Although not all Fleet Managers are directly involved in deciding which operational methods to adopt, it’s vital that they have an understanding of the underlying principles involved.
The basics of corporate operations
Firstly, it’s necessary to understand what the vehicles are for. For a small number of organisations the fleet is the core of the business, for example couriers, chauffeur services, or daily rental companies. For others, the fleet exists almost purely to enhance remuneration, a way to provide a form of non-cash payment, with virtually no business requirement to use the car at all.
However, for the majority of businesses the fleet is used to meet both these needs. Essentially, it’s an easy way to provide mobility for day-to-day business travel, conveniently packaged to meet the private motoring needs of the employee. Knowing why an organisation has decided to run a fleet helps the Fleet Manager to focus on the best way to manage the fleet. But whatever the
reasons, these should include areas such as:
Acquisitions, Disposals, Service and maintenance, Fuel and Insurance.
Doing it yourself
Many fleets still handle almost everything in-house, working to a prescribed fleet policy and processes agreed with management and HR, for which the Fleet Manager should have overall responsibility. Within the scope of their responsibility the Fleet Manager may have to liaise regularly with other department heads, such as purchasing, finance or HR to ensure the smooth operation of the fleet,
which should work broadly as follows:
- the Fleet Manager ensures employees have a
clearly defined transport policy and that it’s fully understood and complied with;
- the Fleet Manager or purchasing manager
identifies the vehicles required, arranges the acquisition and ensures the cash or finance is
available to pay for them;
- the business insures the vehicles;
- the employer or employee makes the necessary
arrangements to have the vehicles maintained;
- the business ensures the necessary maintenance
is carried out on each vehicle;
- the business keeps the Vehicle Road Fund Licence up to date.
A process is agreed for the return or exchange of the car by the employee at the end of the agreed period and its disposal by the employer, who would also ensure processes are in place to deal with unforeseen circumstances such as illness or accident. Most of these actions require little more than a reasonable amount of common sense and basic business acumen. Experience soon builds, but it’s important that the necessary tasks are completed as agreed. Planning is all: establishing and subsequently following the correct systems and processes when initially taking responsibility for the running of a fleet, should ensure its smooth management.