Whether your company has one vehicle or dozens on the road, smart “fleet management” can save you money and help ensure that your drivers are safer. Succeeding at fleet management calls for a multifaceted approach to handling your vehicles — including familiarizing yourself with applicable tax laws, keeping up with maintenance and tracking vehicle usage with today’s technology.

Start With Taxes

One of the best ways to save money on business vehicle use is to sit down with your CPA and talk about the tax impact. Claiming the available deductions can make a big difference in the costs involved — particularly in the first year of ownership. For example, under current tax law:

• You may be able to deduct certain amounts for depreciation of vehicles used for business purposes, including passenger cars and light trucks or vans. (Again, consult with your tax advisor for further details.)
• You may be able to deduct the business-use percentage of operating costs such as gasoline, oil, maintenance, insurance, registration fees and licenses.
• If you lease, you may be able to deduct the business-use percentage of your monthly payments. Deductions are slightly reduced for certain passenger cars and light trucks and vans. You may also be able to deduct the business-use percentage of operating costs for a leased vehicle.

Whether you buy or lease, keep good records of business miles driven and other related expenses.

 

Keep Up With Maintenance

Beyond tax savings, diligent maintenance can keep costs down as well as help prevent breakdowns and accidents. Here are a eight tips to consider:

1. Check the air pressure of tires. This should be done on a regularly scheduled basis, perhaps even daily during colder weeks or months. Low air pressure causes stress and irregular wear that can cause drivers to lose control.

2. Inspect tires. Many experts recommend checking tires every 30 days for wear and tear, damage, and evidence that the suspension isn’t aligned properly. The owner’s manual or your maintenance provider can give you more specific guidance.

3. Rotate tires regularly. This should done on a regularly scheduled basis to help achieve more uniform wear. One general guideline for tire rotation is to do it approximately every 6,000 to 8,000 miles. But check your owner’s manual or ask your maintenance provider for more specific guidance.

4. Choose the optimal fuel type. Every business vehicle should have its own assigned type of fuel. Sometimes using premium gasoline is unnecessary, allowing you to cut fuel costs by buying regular unleaded. Check your owner’s manual or ask your maintenance provider about it.

5. Shop around for a maintenance provider. The costs of vehicle maintenance and repair can vary widely depending on which shop you use. If you’re happy with the service and prices of a long-time provider, that’s fine. But don’t hesitate to reassess your provider every year or two to see whether you can do better.

Alternatively, if yours is a midsize or larger business, you could consider bringing vehicle maintenance in-house. Doing so will entail substantial investments in a facility, equipment, supplies and labor. But you may be able to keep closer tabs on your vehicles and speed up maintenance and repairs to stay more productive.

6. Protect your vehicles from the elements. If possible and financially feasible, keep business vehicles in a garage, under a carport or, at the very least, in a locked, fenced-in area. Doing so will keep them in better condition, help prevent theft or vandalism, and may lower your insurance cost.

7. Shop for insurance. Speaking of insurance, it obviously represents a major cost in operating a business vehicle or vehicles. Reevaluate your insurance rates regularly. If you’re not getting the best deal, rebid your policy.

8. Encourage safe driving. Arguably, the biggest risk related to fleet management is human error. Unsafe drivers can escalate fuel and maintenance costs, raise insurance rates (including workers’ comp), and lead to devastating legal exposure if an accident occurs. Run a motor vehicle report on every company driver. Revoke driving privileges immediately for anyone who drives recklessly. On the flip side, consider rewarding employees with excellent driving records.

Catch Hidden Costs

Where fleet management really makes a difference is catching the many subtle, easily overlooked costs of business vehicles. Getting lost or caught in traffic jams can waste substantial gas and time for those who spend many hours on the road. As mentioned, drivers who speed also consume more gas, cause more wear-and-tear and are more likely to get into fender benders — or worse.

A relatively simple and inexpensive technological approach to fleet management is making sure every one of your drivers uses a smartphone app to navigate to locations, as most now calculate the fastest route. There are also apps that allow you to track where each vehicle is, so you can tell if a driver is lost or taking liberties with the vehicle.

A more sophisticated approach is to invest in fleet management software. These systems offer a wide range of features to track key data points related to multiple (even hundreds) of vehicles. The right software will enable you to view a real-time display of vehicle locations, usage (speed, fuel level, driver behavior), where a vehicle is at in its maintenance schedule, whether a vehicle is in compliance with regulatory requirements, warranty data, and much more.

Naturally, you’ll need to shop carefully for fleet management software to ensure you buy a product that suits your needs and budget. You’ll also need to make sure employees use the system and someone keeps a close eye on it. That could be you, the business owner, or larger businesses actually employ a fleet manager whose primary responsibility is, as you might’ve already guessed, to ensure the company’s vehicles stay on the road and in peak operating condition.

At the end of the day: If your company uses vehicles, it’s in your best interest to engage in thoughtful fleet management to oversee all the important issues involved — including taxes, insurance, maintenance, safety and efficiency.