B2B Payments

Price Should Be Least Important For Fleet Procurement

When fleet managers are evaluating suppliers, price is the last question that should be asked is price. With numbers factors to consider, price deceivingly appears to be the most important where as value is key.

Rather than being concerned with the bottom line, it is important for companies to evaluate the suppliers ability to deliver, the culture of the supplier and how well the solution will integrate into the fleet. When Ian Hill, managing director of Activa, a vehicle leasing firm, describes fleeting funding considerations, he explains that “one size fits all doesn’t apply and in more complex fleets a combination of funding solutions is best.”.

Hill outlined the seven factors that fleet managers should take into account when considering the optimum vehicle-funding route for their business.

The factors include:

  • The company’s corporation tax position
  • The company’s VAT situation (in the UK)
  • The organization’s cash situation
  • The employer’s rate of return on capital employed
  • Corporate balance sheet implications
  • The level of internal fleet expertise
  • The culture of the business and its attitude to financial risk and outsourcing

There are many solutions that apply to the needs of a businesses and it is recommended that companies use a processional evaluation system to analyze all available information, to determine the best policy.

The decision to undertake fleet management in-house or to outsource also requires many considerations. When determining how to tackle fleet management, it is important to consider:

  • The size and composition of the fleet and the location of vehicles
  • The level of in-house expertise and fleet management infrastructure
  • The culture of the business and its attitude to risk

Typically, large fleets with a high percentage of commercial vehicles are more likely to have an in-house fleet management solution where as fleets with a large percentage of company cars are more likely to outsource management.

In addition, business must decide if they want to to acquire services on a bundled or piece-by-piece basis.

When making the final decision, at the end of the day, it is important to note that background work must be done rather than just learning the price. Fleet managers must ask themselves if they can find better solutions for their businesses and put in the extra work to find them, moving past the status quo.

 

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Financial Invisibles Report

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