Managing Your Fleet
The full balanced score card approach: Signing a new fleet vehicle contract
3 min read
01 June 2018
It can be tempting to look solely at the price tag when taking on a new fleet vehicle, but it’s important to weigh up several key factors.
When a small business is looking to take on new fleet vehicles, there are several determining factors – and of course, price is often paramount among them.
However, new vehicles are a big investment and making a decision by price alone is not advisable. There are plenty of other questions any SME owner should have the answers to before they sign on the dotted line.
For starters, do you want to own or rent the vehicles? How will you finance them? There is a balancing act between flexibility and cost depending on what type of contract you sign.
Fleet finance options
• Contact purchase will provide the option of taking on higher up-front costs, but it offers the chance to take full ownership at the end of the hire agreement.
• Meanwhile if you know from day one you will eventually want to take full ownership of the vehicle, a hire purchase option means you can simply pay a deposit upfront and then pay off the full value in instalments.
• Alternatively, if you know you will never want full ownership, you can consider contract hire or leasing. These options essentially mean that you are renting the vehicle.
Once you have worked out what kind of finance arrangement works best for your business, you must also consider the long-term costs of the vehicle.
Asking yourself these questions will help you form a bigger picture of the cost of the vehicle over the entire contract period – and make it clear that the up-front price is not the sole criteria.
Who makes the call?
Danielle Tilley, business development director of Venson Automotive Solutions, recommends a “full balanced score card approach” weighing up key criteria.
“These criteria should include capability, risk, financial stability, corporate social responsibility, value for money and price, to ensure that the organisation with the highest score, not just the lowest price, wins the contract,” she said.
It might be a good idea for business decision makers to visit their suppliers and meet their potential account managers.
Tilley also advises that the decision makers involve other parts of the business, such as finance teams and those responsible for HR and health and safety.
“And don’t forget the role of drivers, who will use vans and cars as their offices, and are therefore best placed to help explain what is required for the job,” she explained.
“By involving all the appropriate skill sets in the tender process, organisations can ensure that they find a supplier that fits their operational objectives, not just their budget.”