Purchasing or leasing a business vehicle

Business vehicles can be a huge expense for SMEs in Australia. Purchasing or leasing a vehicle is a big decision to make, and consequently will affect your bottom line. If your're strapped for resources and cash, it's a good idea to look at all the pros and cons before purchasing or leasing a vehicle, rather than regretting the decision later.

LEASING

A fleet leasing arrangement means you outsource most things around vehicle management. A fleet leasing/management company takes care of a whole host of vehicle-related tasks including buying, selling, registering and provision of fuel cards. All you need to do is choose your car and pay your monthly invoices.

Fleet leasing is becoming an increasingly appealing option for many organisations who are enjoying the reduced risk and simplicity a leasing arrangement offers. There’s been a definite shift in the SME market, with organisations in this sector becoming more and more comfortable with the notion of leasing. Custom Fleet’s business servicing the SME market grew by 47 per cent between 2006 and 2007.

Fleet leasing can offer a number of benefits for companies, regardless of their size.

These include:

Better capital allocation
A leasing agreement can mean an organisation can invest in income-producing assets, rather than tie their funds up in vehicles which depreciate quickly over time. By focusing funds in areas directly related to profit making, organisations can ensure business growth is not compromised.

Reduced vehicle rentals and other costs
Fleet leasing companies may have significantly more purchasing power than an organisation outside the industry. The lower prices a leasing company can secure on cars and FBT are then passed on to customers who end up paying less overall.

Less risk
At the end of a leasing period, cars are simply returned to the fleet company (unless an employee wishes to purchase the car). Not only can this save companies the hassle of selling the vehicle, it may protect them from residual risk as they aren’t trying to sell a used car which has depreciated in value over time.

Less of your time
Fewer companies have dedicated fleet managers these days and, as a result, many businesses simply don’t have the resources to source, purchase and manage car fleets. All those things take a lot longer than people think and, without a dedicated person to manage the whole process, it ends up being someone’s job on top of their existing workload. By outsourcing all facets of running a vehicle fleet, companies can free up their time to focus on more important tasks – like running their business.

Simplified paperwork
Under a leasing arrangement, most aspects of running and managing your fleet fall under one umbrella. You receive one invoice each month which covers all associated costs, reducing the administration time spent managing fleet-related issues and expenses. Because companies are paying the same amount each month, budgeting is far easier, helping businesses better manage their cash flow.