June 20, 2020, midnight

Reducing costs has always been one of the most effective paths to profitability for any business large or small. If you run a business and cutting costs isn't one of your personal mantras, then it really should be. Fleet costs can be one of the biggest expenses in a business, especially one that's constantly on the road, so reducing them is absolutely vital. Here are three tips to reducing your fleet costs over the long run.

1. Manage your fleet size

Selecting the optimal number of vehicles for your business is essential. Too many and you simply have capital tied up in non-productive resources, too few and you're potentially missing out on business because you don't have the vehicles for the job.

But size isn't the only consideration – the age of your fleet is important, too. While it's true that the older vehicles in your fleet may not be costing you much in depreciation, the cost of maintaining them can be very high indeed. And of course with each passing year they're losing their resale value. New vehicles are safer, more reliable and probably more economical. Finding that "sweet spot" when it's time to replace your vehicles is vital.

2. Consider your finances

If it's time to replace some of those older vehicles then it's important that you consider your financial options, because outright purchases may not be your best choice. By leasing those vehicles instead you won't have to stump up all that cash, leaving it available for more productive uses. Consider an operating lease, finance lease, hire purchase, or secured loan (chattel mortgage) instead.

3. Develop effective fleet policy

If managing your fleet has been a little ad-hoc until now, then it's time you added a bit of rigour to the process. Here are some things a fleet manager really needs to consider:

• Develop a proper preventative maintenance strategy to minimize costs, prevent breakdowns and keep the show on the road.
• Use telematics in your vehicles to monitor driver behavior and pick out the safest, most efficient routes from A to B.
• Control the personal use of your business's vehicles with a properly developed policy. Excessive personal use of your business vehicles costs you money.
• Use fuel cards to monitor fuel use, cut costs and simplify accounting.

If all of that sounds complex and time consuming then you're not wrong and I'm willing to bet it's not really part of your core business, is it? That's why it makes sense to outsource all that complexity to a business whose core business is fleet management.