If your business depends on vehicles, then you may want to consider starting your own fleet. This puts you in control and saves you from having to rely on third parties. Here, Emma Tyrer, Head of Finance and Operations at Fleetex shares five key points to consider.
How many vehicles do you need?
The term “fleet” may conjure up images of multiple vehicles. Actually, it just refers to vehicles that are owned or leased by and for businesses rather than private individuals. You can have a fleet of one vehicle.
One point to keep in mind is that any vehicle can have technical issues. This means that you need to have a Plan B. In practical terms, this means either you need spare capacity or you need a reliable external vendor who can step in if need be.
What type of vehicles do you need?
Are you mainly going to transport people or cargo or a mixture of both? If you need a mixture of both, what’s the ratio? If you need vehicles for cargo, what cargo will you be carrying? Does it have any special requirements? Do you have to demonstrate compliance with any regulations (e.g. food safety)?
You also need to think about the size of the vehicle(s) you need. Larger vehicles give you more room and flexibility inside. They can, however, be cumbersome to manoeuvre, especially to park. They also tend to be more expensive to buy and to run.
Last but definitely not least, you’ll need to think about your fuel options. Electric may be the green choice. You do, however, need to be confident you can always get access to charging facilities whenever you need them. If you have any doubts about this then standard fuel or hybrid vehicles are likely to be a better option.
Do you want to buy or lease?
In principle, buying means that you end up owning an asset. In practice, new cars tend to carry a significant price premium. They, therefore, deprecate sharply pretty much from the moment they are bought. You can, of course, get around this by buying used. You may, however, need to put in more work to find and check suitable vehicles.
With leasing, you’re essentially buying access to a vehicle rather than buying ownership of the vehicle. That said, you will typically have the responsibility of maintaining it. Leasing can give you access to the newest vehicles at a reasonable cost. It can also make it much easier for you to upgrade regularly.
Regardless of whether you buy or lease, you can benefit from the VAT exemptions available to businesses. If you choose to lease, you can list the cost as an expense rather than as a liability.
Are employees going to have private use of the vehicles?
If they are, then the vehicle use will be seen as a benefit in kind and will be subject to tax and NI. If the employee gets free fuel for their personal use then this is an additional benefit in kind.
How are you going to manage your fleet?
If you only have a very small number of vehicles, then you may be able to manage them using standard Office software. That said, you might still be better with a proper fleet-management solution. With larger fleets, investing in fleet-management software is effectively a must.