When you think about your fleet of business vehicles, does your bottom line come to mind? How does your fleet help you improve cash flow, drive profitability and increase productivity within your business? Or, do you consider your vehicles just another expense without the corresponding benefits? If this is how you think about your business vehicles, then it’s time to redefine fleet.
Fleet Redefined can help turn your fleet into a significant source of business savings. Redefining fleet is a multi-step process. One key component is your vehicle procurement strategy. Are you buying or leasing your fleet vehicles? Is the lease structure optimal for your business? Another important component to Fleet Redefined is maintenance management. Once you have your fleet of vehicles, how do you keep them running and on the road? Is it important to have a maintenance plan and follow the manufacturer’s preventive maintenance schedule?
Find the answers to these questions and more as Mike Albert Fleet Solutions helps you redefine fleet through purchasing strategies and maintenance planning.
Money down or money saved?
There are pros and cons to purchasing and leasing depending on your company’s strategic goals and the plans for fleet vehicle usage. For example, if you own your fleet vehicles but are looking for greater flexibility in the replacement schedule or the number of vehicles to replace, leasing may be the better option. However, if your vehicles have a longer lifecycle, they may have a lower resale potential and purchasing could be the better option.
Consider the following about leasing:
- Lower up-front sales taxes and fees in most states
- Greater flexibility for vehicle replacement strategies
- Accounting and tax benefits
- More predictable long-term budgeting
- Increased cash flow (capital is not tied up purchasing vehicles)
- Positive net present value (NPV)
- Opportunity for complete reporting, simplified vehicle ordering and potential vehicle discounts (when using a fleet management partner like Mike Albert Fleet Solutions)
- Choosing the optimal lease structure
A strategic assessment and evaluation of your current situation and future fleet goals will help to determine the best lease structure for your business. Additionally, restructuring your lease may also improve your EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization).
Closed-end leasing
- Provides options for cash-flow concerns, unpredictable budgets and resale options
- Mitigates the need for large cash expenditures to purchase vehicles – preserve the capital for other parts of your business
- Simplifies budgeting and forecasting – eliminates the anxiety of surprise fleet expenses
- Protects from market fluctuations – there are no resale obligations (and when working with Mike Albert Fleet Solutions, you assume no risk associated with depreciation and remarketing of Closed-End leased vehicles)
Open-end leasing
- Provides options for companies keeping vehicles long-term, needing more flexibility or upfitting vehicles for their specific industry
- Mitigates the need for large cash expenditures to purchase vehicles – yet still has similar benefits to ownership
- Provides greater flexibility – allows for options in the event of unexpected fleet changes
Open-End leases also have two different rate options – fixed and floating. In an Open-End fixed rate, payments are fixed at the time of delivery and remain locked through the lease term. Interest rates are indexed according to the Business Day Rate, established at the onset of the lease and fixed for the term.
An Open-End floating rate is beneficial when interest rates are high, but expected to decrease over the life of the lease.
Reducing fleet costs does not have to be a complicated process
A comprehensive maintenance management plan is a simple and efficient way to ensure your fleet vehicles maintain their value and continue to meet the demanding needs of your business. It also provides valuable data about your fleet that is not only beneficial for budgeting, but also allows you to plan a more effective vehicle lifecycle strategy.
Utilizing a fleet management partner to implement your maintenance plan is the easiest way to get the most out of your fleet while significantly reducing maintenance costs. In addition to features such as a nationwide network of repair facilities, support from certified technicians and post-warranty recovery assistance, there’s a critical preventive maintenance schedule developed specifically for your fleet.
A maintenance schedule helps to streamline standard upkeep and repairs. Plus, one of the largest sources of cost as well as vehicle component failure is non-compliance with manufacturer-recommended preventive maintenance schedules. As a result, you could be paying for what are essentially avoidable costs and run the risk of disappointing clients due to vehicle downtime.
Purchasing strategies and maintenance management are just two components of a complete fleet management process that will help you reduce overall costs. As a result you can lower your total cost of ownership while improving cash flow and positively impact the bottom line. Welcome to Fleet Redefined – changing the way you think about fleet to reduce variable costs, improve efficiency and increase productivity.
