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ON THE MONEY: The credit crunch five-point plan

Date: 14 April 2008

Rupert Saunders

If it hasn't happened already, I can guarantee the next few weeks will see a memo from senior management asking you to reduce business car costs. The 'credit-crunch' is now a commercial reality and it is going to affect all of us, from business car manager to business car driver.

At times like this, I've always found a simple five-point plan works well. It is easy to construct, simple to explain and, most important of all, possible to achieve. After all, what's the point of a plan if you can't carry it out?

One of the dangers at a time like this is that it's too easy to assume all business car decisions are long term. To keep the senior managers happy, you should be looking for savings now.

Here's my five-point plan to cut costs from day 1:

1: Fuel costs

Listen to the words of Alison Southcombe, marketing leader at fleet software company CFC Solutions: "There is a perception among many fleets that you just have to grin and bear rising fuel costs. In fact, there is much that can be done to manage down the amount of fuel your vehicles use and the pump prices that you pay."

Simply switching to fuel cards will give you better management control and help eliminate fraud.

2: Maintenance

Getting your fleet serviced at main dealers is probably costing you more than a good independent or fast-fit. You need to weigh up the convenience factor here; sometimes loan cars or the ability to work 'while-u-wait' can make paying the extra worthwhile.

And don't worry about residual value, especially for essential-user cars. By the time they have racked up 60,000 miles, the only important factor is the service history; not where the work was done.

3: Journey planning

It might be out of your hands, but you need to be asking yourself "is this journey really necessary?" Simple things like arranging meetings for the afternoon, rather than at 9.30 in the morning could mean less congestion and more efficient working.

Staying overnight, even in a reasonable hotel, can be more cost-effective than driving the same journey twice, especially if it means visiting two clients in one trip.

4: Claim back the VAT

Bob Blackman, of fleet management consultants Emmerson Hill, tells me there are still companies not claiming back the VAT on business fuel. At current prices that could be costing you over 2p a mile; to put that in perspective, remember how much time and effort went into selecting your business cars on a pence per mile basis in the first place.

Now that you have fuel cards (see point 1) it is easy to manage, but do remember drivers will have to produce VAT receipts at least to the value of the claim.

5: Update your systems

If you are still authorising service and maintenance invoices by hand, or sending faxes to your contract hire company to manage the fleet, then it's time you embraced the 21st century.

Automated, online business car management should now be a standard across the industry - it not only saves cost but also reduces errors and improving convenience.

Perhaps you have these five points under control already. If not, I suggest you start now - before that memo arrives.