Month: February 2020

Transport is an indispensable facet of every active business, big or small. Vehicles, hence, are a utility that stand as a necessity. But, operating a fleet of vehicles also comes with costs- both fixed and variable. For new businesses, especially startups, cost is a crucial factor for growth and a fleet only adds to their burden. In this post, we will tell you about why vehicle ownership costs more to new businesses and what they can do about it.

 Let us get started!

 Why Vehicle Ownership Costs More to New Businesses?

 Startups and newly established businesses have their own transportation needs- right from moving employees to ferrying goods. However, the enterprises tied to a limited funding source or with a limited budget might face challenges if they decide to purchase a fleet of their own. The reasons are listed below.

Upfront Down Payment for Vehicles

 If a new business decides to purchase a fleet of its own, it will either pay for it entirely or get a business loan to finance the procurement. At this point, a business must keep in mind that they are making a ‘cash-heavy’ investment in a depreciating asset. Not only will this action rob them off precious funds (that can be used to hire additional workforce, make parallel investments, etc.), but also add a liability factor on them (if the vehicles have been financed by bank). The bottomline is, for new businesses, the decision to purchase a fleet is a pressure on their internal monetary resources.

Vehicles are Depreciating Assets

 If an enterprise owns a fleet, it can straightaway be marked-off as a depreciating asset. Vehicles, as soon as they move out of the showroom, lose their value and continue to do so unless sold. For a new business that is looking to minimize its liabilities and increase its profits, fleet ownership is usually advised against.

Additional Manpower & Staffing for Fleet Management

Every department, operation and process within a business demands skilled and adequate manpower. A fleet of vehicles is no different. In fact, it requires more skilled people in place that adds up to monthly overhead costs in terms of salary. In addition to this, infrastructural costs need to be factored in too. Covered parking space, accounting software for cost tracking, security measures, etc. can quickly shoot the monthly overhead costs for a new business.

Maintenance & Liability Concerns

Any vehicle, be it a truck, van, SUV, hatchback or a sedan, requires its fair share of maintenance and adequate care for reliable functioning. During a vehicle’s lifetime, a major chunk of the incurred costs is accounted by the monthly maintenance costs. This includes regular top-up service, major overhauls, accidental repairs and spare parts.

As far as liability is concerned, it is another factor that enterprises need to keep in mind. Road accidents, fines, etc. are to be borne by the owner of the vehicle (in this case it is the company). Any major mishap might also lead to a lawsuit which is another big problem for the company’s image and finances.

What can the Businesses do about simplifying their transport needs then?

The answer is very simple- Hire a vehicle leasing service!

Before you critically evaluate the solution, hear out the benefits of hiring a vehicle leasing company as mentioned-below;

Pay only for the usage and save big bucks!

With a reliable vehicle leasing company like SMAS India, businesses only pay for the usage of the vehicles. Be it ferrying employees to and fro or transporting bulk commercial goods via trucks, a company can meet all its transportation requirements at one place.

Thus, hiring a vehicle leasing service will save a company big bucks on vehicle purchase costs, staffing and manpower costs, monthly maintenance costs and more importantly from the potential liabilities.

Enhanced Employee Experience

 Vehicle leasing companies are not just a highly cost-effective solution for businesses, but also a pro-employee experience factor. Employees get their ferrying needs solved on time, with reliable service and benefit of punctuality. This is often perceived as a perk and employees tend to stay longer in companies with butter-smooth transportation.

For new businesses with strict budgets and tight investment control, a vehicle leasing company is the best option to sort out their transportation needs. If you are one of them, try out SMAS India’s services and see the inherent benefits of leasing vehicles yourself!

Be it large corporates, SMEs or new startups, transportation comes up as a cost and logistics challenge. Corporate transportation spans from ferrying employees from remote locations to delivering critical goods on time. While businesses always have an option to purchase the vehicles, setup a management department and supervise all the operations, it rarely turns out smooth.

The Challenges of Managing a Fleet

Cost is just one aspect. There are several other challenges associated with corporate fleet management. Most common of them are;

• Workforce Management– From fleet managers to drivers, it becomes the company’s responsibility to align every employee and work with them efficiently; it is rarely the case.
• Vehicle Maintenance– As a business, one cannot afford to run poorly maintained vehicles. However, it is equally tedious to track the maintenance requirement of each vehicle and optimize the cost.
• Employee Satisfaction– This shouldn’t be a concern if every gear of your fleet runs butter smooth. Though, poor fleet management can lead to decreased employee satisfaction.
• Miscellaneous Reasons– These include insurance, cost of hiring fleet managers and drivers, no tax benefit, etc.

Vehicle Leasing Services at Rescue!

It is at this moment when reliable Vehicle Leasing Services, like SMAS India, arrive to solve the corporate transportation forever.

Vehicle leasing is not just a cost-effective solution for businesses of all sizes, but also a seamless option that keeps operations running smoothly.

Following are the reasons why businesses are leaning more and more towards Vehicle Leasing Services.

Set Motoring Cost without Depreciation

One of the best things about hiring a corporate vehicle leasing company is that the business avoids the depreciation cost. Since, they don’t own the vehicles and only pay an agreed-upon monthly figure, they don’t have to worry about reselling the vehicles and deal with brokers and banks.

Moreover, leasing vehicles saves a high upfront cost required to purchase vehicles. That means the business can leverage the excess funds and does not have to deal with a reduced cash flow in terms of EMIs and overdrafts. Car leasing companies take end-to-end responsibility of providing and maintaining the vehicles.

 

Advantages of a Modern Fleet

Suppose a business invests in an owned fleet. Despite regular maintenance, the vehicles will get old and outdated soon. This might be brand-image issue for some companies, but largely, it is an employee experience issue. With Corporate car leasing companies, businesses get latest vehicles with modern creature comforts, features and amenities. Whether you wish to lease sedans, SUVs, MUVs, even commercial vehicles, you will always get the best vehicles from the market.

 

Limited Liabilities

The moment a vehicle steps out of the parking lot, it becomes a liability of the owner and the driver. If a business is managing multiple vehicles, their liability on the road increases. This exposes businesses to certain risks like fines, accidents, etc. However, if you hire a vehicle leasing company to cater to your business transportation needs, then you can sit back and relax. Critical liabilities lie with the fleet operator and you can enjoy their services with peace of mind.

 

Enhanced Employee Experience

With the services of a car leasing company, you can be assured of a better employee experience. EX is crucial for long-term retention. When employees absorb the comfort, quality and punctuality of the transportation provided by their company, they tend to label it as an ‘add-on’ benefit- something which others might not offer. Clean and latest vehicles reflect your brand’s thoughtfulness and meticulousness for the teams and staff. If you wish to earn more ‘employee-benefit points,’ go for a reliable vehicle leasing company like SMAS India.

 

Boosted Cash flow

Think about the following factors;

• No EMIs on vehicles
• No down payment for vehicles
• No monthly maintenance cost
• No fleet workforce management
• Tax benefits on leasing vehicles
• No depreciation cost

If one adds all the above points, one would notice an increase in the business cash flow in the spreadsheets!

Wait no more! Save more time and money while retaining your talented workforce. Lease vehicles from SMAS India today!