There’s no denying that company-provided vehicle programs are popular. Some companies prefer to have control over the vehicles driven for their business. Others like to see it as a benefit when recruiting talent. But company-provided vehicle programs also require a lot of work. Which is why many businesses look to fleet management companies. Whether your company has managed a company-provided vehicle program for years or your company is new to the idea, it’s important to set expectations. What do fleet management companies do for a company? Let’s dive in.
When it comes to fleet vehicles, what do businesses need managed? This depends on a number of factors, perhaps the biggest being the size of the company and its fleet. The bigger the company’s mobile workforce, the more attention it requires. The number of areas that require corporate fleet management include vehicle acquisition, fuel spend, maintenance, accidents, safety programs and more. We’ll start with vehicle acquisition.
First, there’s the purchase or lease of the vehicles themselves. Which vehicles and how many will depend on the needs of your company and its drivers. Some companies require specialty vehicles. Others may look to meet sustainability goals by replacing internal combustion engine (ICE) cars with electric vehicles. The size will also likely have an impact on the terms of the lease or purchase. Acquiring, or replacing, vehicles may seem like the handful, especially if it’s for a mobile workforce of more than 10 or 20 employees. But the management really begins when your company has the vehicles.
Fuel is one of the largest expenses in fleet management. Many companies provide mobile workers with a fuel card to cover the expense of gas. This enables employees to gas up as they please. This can create leakage issues for companies offering fleet vehicles to be used as personal vehicles. Employers have little to no visibility into how those gas cards are being used.
Because the IRS considers fleet vehicles a taxable benefit, companies should implement a personal-use chargeback (PUC) to cover non-business use of the vehicles and fuel costs. Companies that don’t have PUCs or charge employees a general average expose themselves to audit risk. Without a fleet mileage tracking app, PUCs are also difficult to keep tabs on and requires management.
Fleet vehicles, just like any other vehicle, require regular maintenance. From oil changes and tire rotations to filter changes and more extensive fixes, keeping a schedule tracking these needs is just one step in the corporate fleet management process. Or, say an employee leaves the business. The company now has a vehicle sitting idle on their lot and on their books until someone is hired to make use of it. Though it’s an idle, it will still require maintenance, and, depending on the season, proper storage. Additionally, if a fleet vehicle gets into an accident, the repairs are also the company’s responsibility.
Fleet accidents also require management. This is an issue many companies with fleets face. Say a fleet vehicle is involved in a fatal accident, and the company employee is found at fault. More often than not, this results in litigation, and plaintiffs will go after the company. One way companies try to overcome the issues of fleet accidents is driver safety programs. This includes training, motor vehicle record (MVR) monitoring, driving behavior monitoring and more.
Some fleet management companies help businesses through the buying process, with maintenance and fuel, even accidents. Other fleet management companies offer services almost exclusively around driver safety. They may provide GPS tracking and safety cams, share route information and driver fuel receipts. That leaves the rest of the corporate fleet management to the company that owns the vehicles.
Fleets are the most expensive vehicle program option. While a fleet management company may help decrease some of those costs, it’s likely to remain more expensive than other options. And it’s the least flexible vehicle program available. Scaling up means purchasing more vehicles. Downsizing means either maintaining idle assets or trying to sell them off.
There are companies that require specialty vehicles. Companies not chained to vehicle ownership will find employees happy to operate personal vehicles for business purposes, provided that those companies reimburse at a fair rate. With sustained, high demand for new and used vehicles pushing prices to very high levels, there has never been a better time to get out of fleet. Find out how a FAVR program can save your company and mitigate risk.
Companies with fleet vehicles have concerns with change management. More than any other vehicle program, businesses worry what will happen when they transition from fleet vehicles to personal vehicles. The issue is how the driving employees will react. Will they be provided for? Will they leave because they no longer have that fleet vehicle?
That’s a lot to overcome. If your company is stuck in this position, a good next is a fleet mileage tracking app. Employees still have their fleet vehicles, and, with the right app, their personal use chargeback won’t be an average, but an accurate rate down to the mile. This guarantees employees are charged only what’s due. It also helps companies gain insight into their mobile workforce. Managers can better understand how much employees are driving for work and how much fuel goes to business mileage.
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