Best Practices For Protecting Finances and Budgets In 2022
When the vehicle supply chain is tumultuous, and vehicle availability is severely limited, you gain a greater appreciation for the vehicles you do have in service. More than ever, you see them as an investment that is vital for delivering your company’s core goods and services.
Suddenly you’re seeing more clearly how driver behavior puts wear and tear on your vehicles, and how efforts need to be made to maintain vehicle performance. Increased operating expenses (maintenance, parts, fuel, etc.) from vehicles kept in service longer than is optimal could cut into the capital on hand once new vehicles begin coming off the production lines more regularly.
Now’s the time to work in more cost control best practices throughout the vehicle lifecycle: buy, drive, service, sell. This checklist will help.
- Ensure your current funding options best match your company’s strategic and tactical goals, and be sure to examine those options in conjunction with market fluctuations.
- Align your lease terms with your cost analysis and replacement strategy. This can reduce the financial burden on annual capital expenditure budgets.
- Control acquisition costs by right-sizing your fleet to your business needs. Best case scenario: you can buy and spec vehicles to suit the job requirements. During supply chain shortages, you may need to flex more on models and trim options based on availability.
- Choose models and specs that are projected to return maximum resale values and reduce your total cost of ownership.
- Implement telematics technology so the integrated data contributes to more thorough analysis of driver behavior and vehicle performance. This will identify actionable opportunities to control and lower operating costs relative to maintenance, fuel, and accidents.
- Use telematics to validate your electric vehicle decision making, which includes determining the right kind of EV for your fleet plus budgeting for infrastructure needs.
- Monitor driver behavior and proactively assign targeted training to prevent vehicle accidents, higher repair costs, increased downtime, and potential liability issues.
- If your risk mitigation strategy has shown a reduction in accident rates and liability costs, don’t hesitate to ask your insurance company to lower your rates.
- Track fuel efficiency rather than fuel costs. Pinpointing driver behavior and vehicle productivity is still your best strategy for monitoring and controlling your fuel spend as prices continue to steadily increase.
- Continue to evaluate preventive maintenance schedules compared to operating costs. Make adjustments based on current usage, if vehicles are being kept in service past their expected replacement dates.
- Delays with new vehicle deliveries and licensing requirements contribute to lost productivity and revenue. Keep a broader view on operations by tracking status and exceptions.
- Vehicles that are off the road for maintenance and repairs aren’t just raising operating costs. Soft costs like lost work and revenue also have a huge impact across your entire organization. Use proactive analysis and actionable findings to reduce downtime.
- Remember that while used vehicles may have reached their end game with you, they may still hold value to a potential buyer. Find the right market to reach that buyer.
- Plan a consistent annual replacement cycle. Predictable capital forecasting helps your finance team align the fleet budget with their needs for improved cash flow, faster growth and competitive advantage – which also increases the odds they’ll favor your request.
- Consider options such as refinancing existing leases, increasing amortization terms, or tapping into the potential equity in existing vehicles to generate capital from your current fleet.
Your fleet is an investment. Implementing best practices that manage your fleet holistically will get you through challenging times more smoothly.
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