There are many ways that companies can save money on their motoring costs but most company directors find it difficult to dedicate time to such matters. There are so many other pressing issues that need to be dealt with, when running a business. There follows some simple suggestions that could go a long way to reducing a company's overall motoring costs.
If a company is currently purchasing vehicle outright or on Hire Purchase then it could be worth considering Contract Hire. The monthly outlay will almost certainly be less, there is no exposure to the risk of a drop in future values and it tends to tie up much less staff time. The vehicles are normally within the warranty period so there are no nasty surprises and even maintenance can be included in the monthly cost.
Apart from the prospect of lower monthly outlay, the other real saving is in staff time; in particular, a member of staff or one of the management team, no longer having to get involved in the very time consuming business of selling the vehicles when it come time to dispose of them. A company does always have the option to part exchange their cars through the dealership from which they are purchasing their vehicles. Although due to the relatively low amounts dealers tend to offer, this can have the effect of further pushing up motoring costs.
Controlling fuel costs is another important factor, most companies could benefit by addressing this issue. It is important to ensure that employees are not using more fuel than is necessary. There tends to be a lot of wastage in this area and there are a minority of employees who would, given the opportunity, consider filling up their wife's car with fuel paid for by their employer.
The most effective way of controlling fuel costs is by issuing fuel cards to employees. The employer then has a computerised record of where and when an employee refuelled, complete with the vehicle registration details. It becomes relatively easy to make comparisons between the expenditure of different employees and helps to track an employee's movements.
The other benefit is that the company knows exactly what it is paying per litre of fuel. Fuel prices do vary and its not surprising that employees do not pay a great deal of attention to the price at the pump, many people do not, even when they are spending their own money.
The cost of an employee filling up at a more expensive filling station is not as much of a problem as it was at one time; in the 1970's petrol stations adopted the American idea of giving Green Shields stamps, which were then exchanged for gifts. Not unnaturally employees filled up their company car where they were issuing stamps. Then certain filling stations started to give double stamps and then others treble and of course the company car drivers went wherever they were issuing most stamps, regardless of the cost of the fuel.
Something similar happened during the 1980's when petrol stations started issuing "free" glasses with petrol. Not only were company car drivers avid collectors of these glasses, they would actually drive out of their way to get the glasses that they wanted, costing the employer even more money. For years at every barbeque one attended, the drinks were served in the same glasses. Nobody ever flinched when one was broken, the standard response was "oh don't worry we've got hundreds of them", all funded out of their employer's fuel costs. Fortunately that is a thing of the past but it seems sensible for companies to monitor fuel costs more closely and it never does any harm for the employees to be aware that costs are being monitored.
It seems quite extraordinary that even today there are employers that have salespeople and engineers out on the road but do not provide them with satellite navigation systems. There is one multi national company that has service engineers visiting clients throughout the UK. Some engineers work in quite remote and scattered locations and others in busy and complicated city centres, all without the benefit of Satellite navigation. One can only think that the department that would be responsible for purchasing the systems is proudly within budget and the enormous additional motoring expense gets lost, as do so many costs, within very large organisations. Fortunately most companies have not got that large and common sense still prevails.
There is a lot of evidence to suggest that even on regular journeys employees often go a very long way around, simply because that is the route they know. In the general London area there are many company car drivers that go almost everywhere on the M25, in spite of the fact that journey times are notoriously unpredictable. Often there can be a route that is quicker and only half the distance, using or partially using the North Circular would be one example.
The problem with employees driving further and for longer than is necessary is the obvious loss of productivity coupled with a significantly increased motoring cost. Fuel makes up part of that cost but then you have additional maintenance costs; more regular servicing is required and tyres need to be replaced more often. Contract Hire costs depend on the mileage to be driven so it also costs the company more in monthly rental, if unnecessary miles are driven. If the vehicle is owned by the company rather than on Contract Hire there is still a cost because the extra mileage will reduce its residual value. There is no question that a considerable amount of money can be saved by companies providing satellite navigation for their employees.
In summary companies could consider Contract Hire, which can often have a considerable impact on their monthly outgoings. Look at the possibility of introducing fuel cards for better control and monitoring of fuel costs and treat satellite navigation as essential for all employees who drive on company business.
