4 Min Read
When is it Time to Outsource Fleet Management?
Outsourcing fleet management can be a smart choice for some organizations. Here are a few things to consider before deciding whether to own or outsource fleet management to a professional.
Finances and Cash Flow
Many organizations that own and finance their fleet tap into their bank line of credit to acquire vehicles. By acquiring vehicles through a professional fleet management company that will own the vehicles, a separate line of credit may be established. This approach allows the organization to leave its line of credit open for other opportunities and needs that require capital.
In addition, fleet management companies often have flexible leasing arrangements, which can lessen the amount of debt on an organization’s balance sheet as compared to traditional loans.
Size of the Fleet
In general, fleets with 25 or more vehicles benefit the most from engaging with a professional fleet management company, as fleets of this size start to have opportunities to improve efficiencies and lower the overall cost of ownership.
Engaging with a fleet management company can help an organization determine a custom solution based on the many variables that are unique to its situation – and desired budget. After an analysis of an existing fleet, an organization may find that there are ways to adjust their fleet composition and save money.
Maintenance and Upkeep
It’s a great feeling to completely own a vehicle, but it’s also no secret that older, high-mileage vehicles can be more trouble than they are worth. Vehicles that are past their prime may prove more expensive in terms of higher and more frequent maintenance and fuel costs, as well as opportunity costs due to lost productivity.
Organizations across the country are also starting to be more mindful of the impact their fleets have on the environment, and their customers are too. Newer, more fuel-efficient vehicles have better fuel economy and lower emissions than older vehicles that have accumulated wear and tear.
Unfortunately, keeping a fleet fresh by replacing vehicles every few years can be a major capital expense. A fleet management company can help organizations manage that cost and give them peace of mind that their fleet is well-maintained and cost-efficient.
Full-service fleet management companies can also provide maintenance, vehicle registration and use reporting, licensing and registration, insurance and fuel cards that automatically monitor fuel purchases and miles for each vehicle.
A fleet management company can ensure that vehicles are replaced after they have reached the optimum point in their lifecycle, as well as help achieve maximum resale value. Due to the nature of their business, fleet management companies are often remarketing experts as well. A proper cycling and remarketing program considers many factors, including time of year, mileage, vehicle type, age, maintenance history and the current used vehicle market.
The Final Choice
In the right situation, outsourcing fleet programs can free up time and financial resources, while offering organizations new, well-maintained vehicles that use cleaner vehicle technology.