Purchasing or leasing a business vehicle

Flexibility
When purchasing rather than leasing a vehicle, companies must take responsibility for selling the car. This can mean significant time and costs for an organisation as they try to secure the best return and manage the whole process. Fleet management companies take this hassle away.

There may, of course, be shortcomings associated with purchasing, some of which include:

Depreciation
Cars are well known as one of the worst depreciating assets you can purchase. Investing in such loss making assets can have profit implications for your business because you are forced to divert funds to purchase cars on a fairly regular basis. When vehicles become outdated, organisations must spend more money to upgrade them, once again using valuable funds to maintain the fleet.

Disposal costs and hassle
When a vehicle reaches the end of its life or is no longer needed, companies must take responsibility for selling the car. This can mean significant time and costs for an organisation as they try to secure the best return and manage the whole process.

Unknown costs
Owning your own vehicle fleet makes financial planning harder. At any time, there could be a surprise bill – whether that’s repairs, maintenance or insurance. Not only do you need to pay for those bills, you also need to manage everything around actually getting the maintenance done. Worse still is accident management – a whole lot of paperwork emerges following any sort of vehicle damage and it can be a time consuming exercise to manage it.

A fleet management company removes all of that, taking care of the claims processing, organising repairs and liaising with the insurer.

Keith Cormican is managing director of Custom Fleet Australia (www.customfleet.com.au), one of the largest providers of fleet management and leasing solutions to the large corporate, government and SME sectors.