GreenFleet: SME Guide

SME Guide

Advice for small and medium-sized enterprises facing fleet management challenges Brought to you by

GreenFleet DRIVING THE SWITCH TO CLEANER FLEETS

22 Fleet management The SME fleet management role requires a credible level of skill, knowledge and experience, supported by attention to detail, numeric accuracy and people management skills, writes ICFM’s Peter Eldridge 25 Telematics Telematics is being widely adopted by SME fleets to give them the journey and driving information that enables better decision-making for a more efficient and cost-effective fleet

31 Breakdowns & SMR Service, maintenance and repair (SMR) is often cited as a burdensome task for small to medium businesses, but it is an essential component in running a cost-effective and safe fleet

34 SME panel of experts London’s van scrappage scheme targets micro-businesses. How else can SMEs be supported with preparing for Clean Air Zones and other changing air quality regulations?

SME Guide Written by Peter Eldridge, director, ICFM

FLEET MANAGEMENT

Managing an SME fleet effectively The SME fleet management role requires a credible level of skill, knowledge and experience, supported by attention to detail, numeric accuracy and people management skills. ICFM’s Peter Eldridge shares some advice on how best to manage an SME fleet The challenges associated with managing small to medium fleet enterprise businesses (SMEs) have remained fairly consistent over the past few years – linked to a desire to enjoy large fleet benefits in terms of reduced cost and high service delivery but achieving it with a reduced level of available funds, resources and perhaps skill and knowledge.

The advent of Big Data has provided opportunities for SMEs to enjoy greater levels of attention as a customer segment, driven largely by a supply chain and vehicle leasing broker market that can now provide elegant and sophisticated service offerings within an economy of scale cost base.

This has produced two main outcomes: SMEs now have the opportunity to ‘punch above their weight’ in respect of managing their vehicle fleets and achieve much improved levels of operational efficiency.

And conversely, with some SME fleets, this raised level of service offering has actually become a millstone and exposed gaps in their fleet operations, mainly involving skill and knowledge.

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This article is focussed on providing guidance for options one or two above and the key message is that if the decision is to manage the vehicle fleet in-house, it requires a dedicated approach to do the job effectively, which cannot be successfully fulfilled by delegating the responsibility to an existing employee, with inadequate skill levels, on an ad-hoc basis.

The SME fleet management role requires a credible level of skill, knowledge and experience, supported by a penchant for attention to detail and numeric accuracy, coupled with a talent for negotiation and people management skills.

Who manages the fleet?

Vehicle acquisitions What are the fleet management options Managing a vehicle fleet in 2019 and for an SME fleet? There are only three beyond involves the usual ‘hygiene’ options: Employ a dedicated fleet factors that include: vehicle contracts; manager or administrator; nominate service, maintenance and repair (SMR); an existing core business director or mileage management; short-term hire; manager to take on the role, or outsource breakdown assistance; insurance and to a fleet management company. incident management; driver support The decision regarding which option is services; cost control, and so on. But, in best, will of course depend on addition there are more strategic the nature and structure goals that need to be achieved. of a business; the size The first of those goals T here and composition of is to develop a vehicle can be the vehicle fleet; acquisition policy that s ubstitu no and the economics has specific emphasis on associated with environmental control and skill, kn te for owledg each option. But meets with government and exp e the fundamental policy to end the sale e rtise especia rule is that no two of new conventional ll businesses are petrol and diesel cars fleet m y in the SME anage alike and the final and vans by 2040, as it decision must be is has already announced. sector. ment geared to achieving Although the Government’s the best outcome for advisory Committee on Climate the business in question.

Change is calling for that date

DRIVING THE SWITCH TO CLEANER FLEETS | www.greenfleet.net

to be bought forward to 2030 or 2035 at the latest, potentially perhaps just two fleet vehicle replacement cycles away.

In addition, by 2030 the government also expects 50-70 per cent of new car sales to be ultra-low emission vehicles (less than 75g/ km of CO2) and up to 40 per cent of vans.

With just 2.6 per cent of cars registered in 2018 being ultra-low emission and only 0.5 per cent of vans, the clock is already ticking.

The availability of ultra-low emission vehicles is playing catch-up with those targets and to make matters even more difficult, last year’s implementation of the Worldwide harmonised Light vehicles Test Procedure (WLTP) emissions and fuel economy testing regime and the level of uncertainty surrounding Brexit, has contributed to lengthy vehicle manufacturer lead times for low and ultra-low emission vehicles.

So planning a vehicle acquisition policy in the current business climate is not easy and given all the current contributory factors, SMEs, like their larger fleet peer group, will need to take a prudent and pragmatic approach if they are to succeed.

SME fleet managers will have to analyse their vehicle fleet in sectors: cars and LCVs; essential users/‘perk’ allocation; high and low mileage; and usage trends (particularly the low mileage segment).

Then they’ll have to take a ‘blended’ approach to aligning the best mix of powertrain options: battery electric vehicles; ultra-low emission vehicles; and petrol/diesel.

Consideration of the alternative options include cash for car; grey fleet; short-term hire; extending the current vehicle fleet retention policy (not the highest polluting vehicles).

For SMEs in particular, building a case for a vehicle acquisition policy running up to 2030/2040, places the spotlight on the need for a fleet responsible individual who has the tenacity and time available to deliver a successful outcome.

If we now add into the mix the other elements involved in operating a vehicle fleet vehicle remarketing; finance; legal compliance; administration; people management; duty of care etc, it goes without saying that there can be no substitute for skill, knowledge and expertise especially in the SME sector.

Training matters So how can an SME achieve what is required? – well there is no better place to start than the ICFM. Whether you have direct responsibility for the fleet operation, or indirect involvement as an HR or finance team member, the Introductory Programme leading to

the Introductory Certificate in Car Fleet Management is designed specifically for new entrants to the fleet industry and is a cost effective and ideal entry level.

In addition to providing a background on how vehicle fleet management has evolved, the programme will enable new entrants to understand what’s involved in developing a fleet policy relevant to the needs of the business; the importance of ‘asset management’; provide a pointer to the changing face of fleet-related roles in the future; and provide a ‘blueprint’ for the key competence elements involved.

For SME employees who have more experience in the management of a vehicle fleet and a desire to achieve an even greater level of aspirational achievement, the ICFM ‘Certificate’ Programme leading to the Certificate in Car & LCV Fleet Management is the perfect choice, since it is recognised in the industry as the ‘benchmark’ standard for those employed in the management of a vehicle fleet.

The ICFM Certificate Programme is an effective and enjoyable means of attaining the externally endorsed Certificate in Car & LCV Fleet Management qualification and covers five competence elements which include: managing communication and relationships and the core principles of administration, finance, acquisition and vehicle remarketing and the law Tips for managing your SME fleet Finally, below are five top tips to bear in mind when considering how to best manage your SME fleet: Firstly, acknowledge the fact that managing an SME fleet is an important sector within the fleet arena.

Be mindful of the financial and operational benefits that effective fleet management at SME level will deliver to the business.

Maintain market trend awareness and embrace change - don’t resist it.

Take on board the skill, knowledge and expertise requirements that are essential for the effective operation of a modern SME fleet (the ICFM can help here).

The area of SME fleet management is a complex one and I have covered some of the key factors involved. Would you like to know more? For expert help and advice join the ICFM, which provides access to a wide range of fleet operational best practice tips. L FURTHER INFORMATION administration@icfm.com www.icfm.com

SPONSOR’S COMMENT

DFM: ‘The world’s oldest start-up?’

SME Guide

SME fleet managers should develop a vehicle acquisition policy that has specific emphasis on environmental control and meets with government policy to end the sale of new conventional petrol and diesel cars and vans by 2040

Patricia Wolfe, MD Daimler Fleet Management UK

Daimler Fleet Management (DFM) is evolving its approach to fleet management and vehicle leasing.

It seamlessly merges over 130 years of automotive heritage with the agility and innovation of a modern-day startup mentality.

Late in the 19th century, Karl Benz and Gottlieb Daimler were credited as the pioneers of an invention that changed the world, the automobile – this inventive tradition still lives on in the companies which bear their names. DFM constantly strives for new ways to make things work better. Not just financing vehicles and managing fleets but working with customers to find bespoke, innovative solutions to deliver business objectives.

The changes at DFM UK include new appointments, enhancements to operating processes and thinking differently about customers’ requirements, especially SMEs. Having deployed the initial solution DFM then works with the SME to ‘bolt-on’ value‑add products, continuously enhancing their fleet efficiencies in real-time and supporting their business growth. In other words, DFM is effectively a 130-year-old business acting like a start-up. Agile working is a mindset approach which many customers are embracing.

In some circumstances, rather than structuring and delivering an entire fleet policy including the additional products and services in one wave, certain deliverables can be fast-tracked, actualising savings and efficiencies from day one. Why allow items ‘B’ and ‘C’ to delay ‘A’ if the benefits of ‘A’ can be realised sooner?

DFM is so confident that we can improve the performance and efficiencies of your fleet that we will complete a ‘Fleet Fit’ health check of your fleet requirements completely free of charge, ensuring that your fleet and related services are in line with your current and future business objectives.

FURTHER INFORMATION Dfm-uk@daimler.com 01908 697468

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We’ll keep your fleet working for you From 24-hour breakdown cover to accident assistance, with mobile technical services and connected solutions that help keep your wheels in motion.

Talk to us today about Business Breakdown Cover Call 0800 294 2994 Or visit theAA.com/business

The tools for better fleet management

The benefits of telematics One key question to answer in the quest for telematics success is why the need for a telematics system?

The answer will vary depending on whether the question comes from the finance department, HR, the fleet manager, drivers or even a union representative.

However, in most cases, the issues covered fall into four broad themes, all of which are interlinked: mileage and time management, fuel and emissions, safety and security and financial benefits.

SME Guide

TELEMATICS

Telematics is being widely adopted by SME fleets to give them the journey and driving information that enables better decisionmaking for a more efficient and cost-effective fleet Vehicle telematics is based on the idea of gathering, storing, and transmitting information about the vehicle for monitoring purposes. This information can be used to analyse vehicle performance, vehicle conditions, driver performance, and more.

However, all the vehicle data in the world is utterly useless unless it is used to inform better decision making. How the data is analysed, and the subsequent decisions it informs are key to a successful implementation.

Telematics devices are unobtrusive, passive observers that are located out of the way of the vehicle controls and the drivers sight line. These monitors collect information and transmit it back to a data collection point, usually back at the office.

The devices themselves come in a number of forms, allowing fleet managers to use what is best for them. Much of it depends on how the data will be collected, and the available budget.

Mileage and time management Telematics shows where vehicles are being driven and how they are being used. This can benefit the business in a number of ways.

Tracking systems are able to identify a vehicle’s location, so the right vehicle Mobile only and Bluetooth Assist telematics and employee can be sent to the closest are cost-effective but are lacking in job, by the most efficient route, guided capabilities. Along with 12V connectors, they by real time traffic information. can be easily transferred from one vehicle Automatic mileage updates can be to another, so they can be kept with drivers received by managers or suppliers, such if users are regularly switching vehicles. as leasing companies, to enable proactive Onboard Diagnostic (OBD) devices plug into servicing and timely replacement of the OBD port on the underside of the steering vehicles. Telematics can help automate column. They will have Bluetooth or even manual and time-consuming processes, cellular capabilities and will be able to collect such as timesheets, to make them more a richer set of data to be used. They can be accurate and reduce paperwork. moved from one vehicle to another, but it is The system will automatically log a little more difficult than with mobile-only vehicle use and location along with the systems and 12V connectors. They are generally start and end of the working day. the best route for most fleets.

This information can then be Original Equipment By imported into payroll systems.

Manufacturer (OEM) Business or private products are very capable, having mileage can be separated but are also the most more a to improve the accuracy expensive, and are vehicle-ccurate, of expenses claims. permanently fixed s p e cific data, a to the vehicle. can qui company Fuel and ckly ide emissions nt where Telematics can action ify assist in planning needs t ob more fuel-efficient taken e journeys, and encourage less aggressive driving, resulting in lower fuel bills.

In addition, systems can report on the fuel economy of specific vehicles.

In a recent study of company car drivers, a telematics system identified a 50 per cent difference in fuel economy being achieved in identical cars over similar journeys. Much of the excess fuel use was down to driving style, including excessive speed and harsh acceleration.

This level of insight isn’t possible with other fuel management systems, such as fuel cards, mainly as the process involves the driver accurately recording mileage when filling up.

By having more accurate, vehicle-specific data, a company can quickly identify where action needs to be taken, such as with fuel efficient driver training.

By improving fuel economy and reducing time spent idling, a business can reduce its total carbon emissions, a key consideration as businesses are increasingly required to provide carbon reporting as part of their annual results. E

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 Safety & Security Telematics can provide the information needed to improve safety, reduce accidents and combat vehicle crime. Some systems can clearly identify speeding, harsh braking and acceleration, sudden steering changes, over-revving and hours of vehicle use. This information can be used to pinpoint safety issues so drivers and managers can be trained and educated.

Studies have shown that for each 1mph reduction in average speed, accident frequency reduces by six per cent. Typical own damage costs rarely fall below £1,100 per claim, while average insurance claims including third-party damage and injury claims can be more than £4,000, a good reason to manage vehicles using actual and real time data.

In addition, telematics can act as a security system, with unplanned vehicle movements raising an alarm and pinpointing the vehicle so police can be directed to its location.

Personal safety can be enhanced for lone workers too, as telematics can track their location and vehicles can be fitted with panic alarms in case of emergency.

Financial benefits Introducing telemetry is no different than investing in any other business system, it has to make business sense.

Typical figures suggest that through better scheduling, higher productivity and increased vehicle utilisation, operating costs can fall by ten per cent.

By covering fewer miles, reducing speeding and improving driving style, fuel use and CO2 emissions can be cut by 15 per cent.

Finally, reduced speeding and greater levels of driver awareness could cut crash costs by up to 50 per cent.

By using telematics to record drivers’ hours, unnecessary overtime claims can be reduced, often by thousands of pounds, while there are other fringe benefits too.

Because telematics systems provide accurate location and time information, a number of companies claim they are successfully challenging fines for parking infringements.

In addition, insurance companies may be willing to consider a reduction in premiums.

The telematics system The data that a telematics system can provide comes from three key sources. The first is from GPS data, which calculates location and speed, the second is from a direct link to the vehicle that delivers information on any aspect of performance it is collecting, which can include oil temperature and even whether doors are open.

Thirdly, some systems have sensitive instruments that measure g-force to identify harsh braking, steering and acceleration.

Telematics devices do suffer from some limitations though and knowing these limitations may help determine what is the best choice for your vehicles. Satellite-based and cellular-based services can lose coverage if driven far enough out of the way. That said, the data can be stored by the unit and transmitted when it is back in service range.

This may limit real-time tracking but should not limit any other part of telematics usage.

Even the most committed supporters of telematics technology will agree that you can have too much of a good thing.

A vehicle tracking system isn’t just a onebox solution, as it can provide a myriad of reports and charts that can either go into minute detail or just provide a graphical overview of key issues related to fleet use.

If fleet managers choose wisely, they will have absolute clarity on their fleet. Choose poorly and information will be irrelevant, too detailed to use or in such great volumes that any benefit is lost in a sea of figures.

Introduction is key Careful introduction of this technology is key to ensure staff feel supported rather than feeling spied upon. As company vehicles are almost certain to have an element of private use, the challenges of persuading drivers to accept the technology and the changes it might bring are much more significant. That doesn’t suggest it can’t be achieved, as thousands of cars are tracked already, but there has to be a much clearer benefit for the driver.

One solution can be to focus on a de-personalised service that offers the benefits of telematics at the most basic level, with automatic reporting of vehicle mileage and driver admin, giving them more time to do their jobs.

If a business is leasing a vehicle, and depending on the supplier chosen, this basic level of telematics may be supplied as part of the package. In some cases, it can be extended to business and private mileage capture to help automate expense reports.

Stolen vehicle tracking can also be added.

Focusing on the personal benefits, such as improved safety and security have been shown to make a positive impact on staff attitudes. The most important factor is to take staff along on the journey by explaining the issues, seeking feedback and addressing genuine concerns with facts and case study support.

A good supplier will have endless evidence of implementation and use strategies that have worked for other clients. Trust those that come with a proven track record and are happy for you to speak to some of their clients. L

SPONSOR’S COMMENT

Keeping SMEs moving with the AA

SME Guide

Telematics can provide the information needed to improve safety, reduce accidents and combat vehicle crime. Some systems can identify speeding, harsh braking and acceleration, and sudden steering changes

Stuart Thomas, director fleet & SME services, the AA

It may be a cliché, but we are in a period of unprecedented change within the transport arena. Indeed, SMEs could be forgiven for feeling frustration at the seeming lack of consistency in terms of low emission vehicle availability and government policy on air quality and engine standards, not to mention tax regimes and technology roll-out.

Of course, with uncertainty comes opportunity. SMEs are in prime position to take advantage of the multitude of data, smart solutions, innovative mobility, connectivity, electric and alternatively-fuelled vehicles. Real-time information is not an aspiration but an expectation and, with data and insights, SMEs can take a smart approach to vehicle selection, route planning, driver behaviour and supplier management.

As an example, the Mayor of London’s £23m van scrappage scheme for micro-SMEs (those with fewer than ten employees) provides business owners with the chance to refresh their vehicle mix, introducing cleaner Euro 6 vans to avoid air quality charges.

However, there are more than 5.5m SMEs in the UK, of which two fifths (37 per cent) operate vehicles, and so there is significant opportunity for much wider scale change.

Connectivity will play a big role in the vehicle landscape, with smart safety solutions paving the way towards autonomy; predictive and preventative maintenance providing greater links between vehicles and garaging networks to better manage SMR; and vehicle to infrastructure (V2X) technology helping to manage traffic flow and congestion.

Indeed, business owners may be tempted to put fleet management at the bottom of the to-do list. After all, there are plenty of competing priorities. But, there will always be a role for the individual business owner or driver in the mix, and it pays for SMEs to keep up-to-date with the latest fleet management opportunities.

FURTHER INFORMATION www.theaa.com

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Is your fleet performing at its best?

Get in touch with our mobility experts and get your fleet fit for tomorrow. #befleetfit

Find out more at daimler-fleetfit.co.uk or call 01908 697468

To be more competitive, make sure you get fleet fit

The challenges involved in managing the company fleet have never been more complex; and yet the responsibility for doing so will often fall upon executives without any specialist knowledge or experience. Finance directors, HR directors, general managers can all find themselves tasked with maximising the efficiency of car, commercial or often mixed fleets.

When the common corporate objectives are to improve fleet performance while reducing costs and maintaining a car policy that will attract and retain staff, where do fleet managers start? How do they analyse their current fleet efficiency and develop a strategy that will deliver a higher-performance fleet?

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The answer could be available from Daimler Fleet Management which is introducing a new level of fleet management support called “Fleet Fit”. The service incorporates a complete Fleet Fitness test that will review every aspect of a company’s current fleet performance to identify areas for potential improvement and savings. According to Daimler Fleet Management’s managing director, Patricia Wolfe: “We have a highly experienced team of fleet management specialists. They act as personal fitness coaches who will work with our customers to review the results of their fitness tests and create bespoke development programmes to improve their fleet performance and make them even more competitive.”

DRIVING THE SWITCH TO CLEANER FLEETS | www.greenfleet.net

These Fleet Fitness coaches use the independent and highly rated Deloitte software as part of their testing and also to establish the financial savings a company can achieve, especially in terms of whole life costs. They then provide ongoing coaching to help the company implement their fleet development programme. As Patricia Wolfe explains: “When a company becomes ‘Fleet Fit’ they will have the agility and capability to respond better to future changes in legislation, taxation and technology, while maintaining maximum fleet efficiency.”

Working with their fitness coaches will also enable fleet operators to increase their fleet management skills and better understand the new vehicle technologies and opportunities available. Daimler Fleet Management believe that Fleet Fitness helps to reduce fleet costs and risks, increase fleet reliability and make fleets more efficient.

Whatever the size of your fleet, if you want it to become leaner and fitter, perhaps you should look at getting Fleet Fit with one of Daimler Fleet Managements fitness coaches.

For more information and to book a fitness test, visit www.daimler-fleetfit.co.uk.

FURTHER INFORMATION www.daimler-fleetfit.co.uk

Reducing vehicle downtime in SME fleets

SME Guide

BREAKDOWNS & SMR

Service, maintenance and repair (SMR) is often cited as a burdensome task for small to medium businesses, but it is an essential component in running a cost-effective, safe and compliant fleet There were 5.7 million SMEs in the UK in 2018, which was over 99 per cent of all businesses, according to the House of Commons Business statistics.

Many of these businesses rely on a vehicle to conduct their business, and breakdowns can cause havoc in terms of lost times, missed appointments and delayed deliveries.

The most common RAC SME callouts relate to batteries, including flat or end-of-life batteries. In total, battery issues equate to 18 per cent of all RAC breakdown jobs for small businesses.

Tyres are responsible for generating the second biggest volume of call-outs, making up 13 per cent of all breakdowns. And, with many vehicles now not having a spare wheel, a significant number of these will be ‘puncture no spare’ jobs, which would typically be very difficult for a business to get fixed without the support of a breakdown company.

Clutch problems are the third most common SME vehicle breakdown seen by RAC patrols.

While only five per cent of RAC small business call-outs relate to clutch faults, they usually require recovery to a garage for repair.

While breakdowns are an unfortunate reality of running a fleet, having robust Service, Maintenance and Repair (SMR) procedures in place can keep vehicles in good health and on the road. But SMR is also cited as one of the more problematic areas for SMEs, often because of the lack of time they can give it, as many SMEs also have other roles aside from managing vehicles.

What’s more, well maintained vehicles are generally cheaper in the long term. This is because they tend to perform at optimum efficiency, and because minor problems can be rectified before they become major ones if they are identified early on. Unplanned maintenance increases vehicle downtime and costs. Plus, a vehicle with a full set of service stamps in its history will usually be worth substantially more when the time arrives for it to be sold.

Legal responsibilities Organisations running fleets have a legal SMR policies responsibility under their duty of care to To get their SMR procedures in place, fleet keep their business vehicles in roadworthy managers need to establish an SMR policy. condition. If there is a serious accident According to Allstar Fuel Cards, who and vehicle condition is found to be a have published a guide on the subject, you factor, the owners and directors can be should firstly consider how often prosecuted and even imprisoned. servicing is recommended by Accurate records of vehicle the manufacturer and what documentation such as MOT Busines kind of suppliers you test certificates, insurance s e s running need to use – franchise certificates and Operator fleets h dealers, independent Licences should be legal re ave a garages or fast-fits? available in one place Asks yourself if in preparation for audit under t sponsibility h e drivers regularly and inspection if needed. i r d uty of care to inspect their vehicles, k e e p their busine and if so, how often?

Have you provided in a roass vehicles dworth them with guidelines E

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Well maintained vehicles are generally cheaper in the long term. This is because they tend to perform at optimum efficiency, and because minor problems can be rectified before they become major ones if they are identified early on  on making an inspection and created a robust feedback mechanism?

Replacing key wear items such as tyres and brake pads often involves making a choice. Can you set a policy in this area? For example, you could decide that tyres will be replaced when there is 3mm of wear left.

Fleet managers should also think about what management tools might be useful in managing the fleet, such as spreadsheets, white boards and specialist fleet software systems.

If you are investigated by the Health and Safety Executive in the event of a serious accident, an auditable trail to prove that a vehicle has been kept in good condition will form an essential part of your defence.

Finally, the value for money from suppliers should be considered, as well as whether you can gain greater control over payments and billing.

Suppliers A supplier should be chosen that best fits your business and driver, including its location.

You will need to consider if the supplier offers good value, how available they are, and if a courtesy car will be available. Can they carry out the work required to a good standard? If you have a fleet of alternatively fuelled vehicles, do they have the skills, equipment and spares to deal with it?

Finally, you should have a good relationship with the supplier, so that they can be relied upon to fix a vehicle quickly, and to charge fairly and transparently.

Managing drivers The amount of driver’s responsibility for SMR should be considered. In some smallmedium business fleets, especially those that operate on a national basis with a central head office, the entire responsibility for

maintaining vehicles is passed over to the driver – they monitor when a vehicle needs servicing or repair, choose the supplier then make the payment and reclaim the cost.

Passing responsibility to the driver is normally not a good way of managing SMR, simply because it means that you are abdicating control in virtually every area.

There is no way of ensuring that the work being carried out is actually needed, that suitable suppliers are being used, that you are meeting your legal responsibilities such as timely MOTs and servicing, that the duty of care is being met, that consolidated invoices can be supplied, and that the business is not being defrauded.

Instead, Allstar Fuels believes that the person responsible for managing company vehicles should keep records that indicate when service and maintenance is due, and should stay on top of the administration for vehicles on the company’s behalf, keeping control of all the key aspects.

However, it is very important that drivers are made responsible for monitoring the basic condition of their vehicle on a day-to-day basis.

Value for money It can be difficult to know whether you are getting value for money when it comes to the cost of servicing and maintenance.

Research from Allstar Fuel Cards shows that fleet budgeting for SMEs is based largely on experience and expectations of what seems acceptable, although this is usually based on nothing more than personal opinion.

The fact is, for many small-medium businesses, researching this kind of pricing is not easy. You can try looking online for typical prices but comparing information in a like-for-like manner is tricky. In many ways, the best that you can do is follow

SME Guide

the tried‑and-tested formula of asking for three quotes from different suppliers, even though this can be time-consuming.

Approving work One of the most difficult financial aspects of SMR is that unforeseen jobs will often occur during planned maintenance that require approval. For example, during a routine service, it could be identified that new tyres are needed.

Research from Allstar Fuel Cards shows that 65 per cent of managers with company vehicle responsibility in small-medium businesses manually approve all service, maintenance and repair work by phone or e-mail, but that they find it, understandably, very time-consuming.

Other methods of approval are occasionally used. Some have a key system of control that requires approval if any bill is more than £500 for example, but a few simply pay whatever bills appear.

The fact is that like trying to ascertain whether an SMR price is good when booking a job in the first place, assessing the fairness of additional work is simply very difficult and most businesses have little choice but to agree.

Allstar has conducted analysis of transactions and found that around 11 per cent of jobs completed by garages are not needed – and that these jobs cost an average of £48.

Payments Paper invoicing systems remain the norm when it comes to paying for car and van maintenance, according to research from Allstar Fuel Cards. However, this is a process that is prone to error, time consuming and even open to employee fraud.

A much better choice is to use electronic, centralised invoices from suppliers, which will allow you to process payments quickly and easily, as well as seeing what work has been completed at a glance.

A few companies still use driver payand-reclaim which is not recommended.

It leaves the driver out of pocket for a while and the employer open to fraud, with little centralised control.

A key point is that you need to ensure that all invoices you receive are genuine VAT invoices and are fully HMRC compliant.

Management tools There are a wide range of software management tools available on the market for small-medium businesses that provide a good management structure for looking after SMR and all other aspects of company vehicle management.

The quality and sophistication of software management tools vary quite widely, as does their cost and effectiveness, and the initial setting up process can be quite timeconsuming. Once in place, though, they will deliver a level of management control and information that is simply not possible using a spreadsheet or paper systems. L FURTHER INFORMATION www.allstarcard.co.uk www.rac.co.uk

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SME Guide

EXPERT PANEL SME FLEETS London’s van scrappage scheme targets micro-businesses in the acknowledgement that smaller firms will be hit hardest by penalty charges or the cost of upgrading their vehicles. How else can SMEs be supported with Clean Air Zones and other changing air quality regulations? Our panel of experts discuss While research suggests that many SMEs are in favour of Clean Air Zones as a response to air pollution, the reality is that smaller firms will be hardest hit by penalty charges or the cost of upgrading their vehicles to meet emissions standards.

Seventy-five per cent of SMEs have said they are in favour of Clean Air Zones (CAZs), according to last year’s Close Brothers Asset Finance Business Barometer.

London’s Ultra Low Emission Zone (ULEZ) came into force in April 2019.

Diesel cars and vans that do not meet the latest Euro 6 standard have to pay £12.50 a day to drive in central London.

Understanding that penalties for entering clean air zones can be unfair to smaller businesses, the Mayor of London has introduced a scrappage scheme to help businesses with fewer than 10 employees get rid of their polluting vans so they can adopt ULEZ-compliant vehicles.

These grants reduce the cost of an electric van by up to 20 per cent or a maximum of £8,000. Businesses and charities will have to be registered in London or have been frequently observed driving in the Congestion Charging Zone.

At the time of launching the scheme, the Mayor urged central government to match-fund the scrappage scheme so it could support other Londoners.

“There is no question that change needs to happen to reduce the impact of emissions on air quality,” comments Sam Sterry from Europcar Mobility Group UK. “But it’s vital that there is clear recognition that such change can have a pretty significant impact on the finances – and maybe even survival – of small businesses.”

Europcar Mobility Group UK conducted research ahead of the launch of the Ultra Low Emission Zone in London and found that its potential impact on the smallest businesses was not particularly well understood or prepared for.

Half of small businesses (with one to nine employees) that use vans hadn’t made plans, even as late as February. And more than one in eight small businesses weren’t sure

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Sam Sterry, head of SME, Europcar Mobility Group UK Since Sam joined the business in 2017, she has been working hard to give SMEs a wider choice of solutions to mobilise their business, capitalising on the growing portfolio of multi-modal mobility services available from the Group. Sam has a background in the SME finance sector – having previously worked for Lloyds Bank and Lex Leasing.

Stuart Thomas, director fleet & SME services, the AA With more than 20 years’ experience in the fleet sector, Stuart’s extensive knowledge of the industry comes from roles across contract hire, disposal and related fleet services. Stuart is responsible for managing all aspects of the AA’s fleet and SME clients, including some of the UK’s largest fleets and most diverse business users.

Duncan Chumley, chief commercial officer, Daimler Fleet Management (DFM) Duncan Chumley is the chief commercial officer for Daimler Fleet Management (DFM). Before joining DFM, Chumley worked as managing director of Free2Move Lease UK and as sales director of Citroen Financial Services. DFM is a multi-marque vehicle leasing company that procures, funds and fleet-manages for public and private sectors businesses of all sizes. what the requirements of the ULEZ were.

More than a third (34 per cent) of London based businesses said that these regulations will be the single biggest transport issue that affects their business in 2019. Despite this, at the beginning of February only 36 per cent said that they fully understood the impact in terms of vehicle emissions.

Sam comments: “This lack of understanding is particularly concerning as the majority of small businesses (88 per cent) surveyed use their vans at least six days a week. For businesses travelling through the ULEZ every day, driving non-compliant vehicles could add up to over £4,500 a year, per van.

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“Initiatives such as scrappage scheme already launched in London, are therefore crucial.”

For micro-SMEs, managing vehicles is very rarely the focus of the business. As such, anything that can be done to make life easier and allow organisations to get on with their day-to-day activities is positive, believes Stuart Thomas from the AA. Stuart says: “The scrappage scheme gives smaller organisations a route to cleaner Euro 6 vehicles, the ability to avoid air quality charges and the chance to remain cost-competitive without having to pass on fees and fines to customers.”

that many manufacturers have kept the want to face the financial outlay for a new scheme going without government funding. vehicle or commit to a lengthy lease, vehicle “The London scheme has its benefits, for rental provides a genuine alternative.” example the allowance can be used to offset leasing costs, not just outright purchase. But The role of hybrids to have any impact on city wide emission Given the urgency of the need to reduce levels, the scheme needs to be CO2, Emissions Analytics has rolled out to larger businesses argued the case that fleets g Tryin and complemented with should adopt hybrids tric c improved incentives rather than waiting for e l e n a e r for vehicle sharing, an adequate supply of o f e b priority lanes for low fully-electric vehicles, vehicle ill help w g emission vehicles and saying they are 14 times n i y y bu er the h better education.” better at reducing realt e h w London’s scrappage assess e. Try and get world carbon dioxide l scheme can also emissions. So should are viab mo for an be used on rental SMEs adopt hybrids a de ount if they are still unsure and sharing services m a d e across London. about full electric? extend time of Sam explains Europcar Stuart Thomas comments: Mobility Group UK’s “While the past 12 months involvment in the scheme: have seen a rapid increase in the “We are offering discounts on midnumber of alternatively-fuelled vans week daily van rental for businesses being launched, the market is still tracking who take up the scrappage scheme but behind aspirational targets when it comes do not want to buy new vehicles or sign to the reality of actually getting hold of up to lengthy lease agreements. one. Between emissions testing regimes, “The same principle could be applied battery supply shortages and manufacturers elsewhere in the country. Whilst the cash sum focusing on their car product ahead of vans provided from vehicle scrappage could be and trucks, not to mention the loss of grants useful to go towards new vehicle acquisition, and other initiatives for hybrid vehicles, some businesses may decide to use those SMEs can be forgiven for not moving quickly funds for other purposes. If they don’t to update their commercial fleets. E

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Speaking about the air quality measures outside of the capital, Stuart adds: “There are more than 5.5m SMEs in the UK, of which two fifths operate vehicles (38 per cent), so the opportunity to make a significant impact on air quality and vehicle emissions clearly extends beyond the M25. We are backing calls for a nationwide scrappage scheme for cars, as well as gross polluters, and would like to see the government working with business organisations and local authorities to deliver greater consistency.

“Improving UK air quality is important to everyone, but SMEs need to know that they will be supported through any transition. We believe that more needs to be done to relieve the cost burden for businesses and to change perceptions, demonstrating to organisations how easy it is to make the shift.”

Scrappage schemes are a great start in helping SMEs to upgrade their fleets, however the current scheme in London has criteria that is quite strict, comments Duncan Chumley from Daimler Fleet Management.

He explains: “The London scrappage scheme is only applicable for firms with under 10 employees and up to £632k turnover.

They also need to provide evidence that the vans have entered the charging zone at least 52 times in the six months before 22 Feb 2019. So it is very limiting.

“The original government scrappage scheme launched in 2009 was so successful

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SME Guide

choice but if it isn’t adequately charged or is predominantly used for long journeys, you are affectively running a petrol engine and can expect to see little decrease in fuel costs. As with all fleet assets, PHEVs and other hybrids must be used correctly and efficiently in order to see the best results.

“If you are unsure – consult your leasing company. Perhaps a long term demo of an electric or PHEV vehicle can be arranged to measure how feasible the deployment could be for your fleet.”

“In addition, while Clean Air Zones and other emissions-based charges have produced a geographic impact in areas like London, the lack of consistency in the roll-out and how charging will be applied means many organisations are deploying a ‘wait and see’ strategy before making any capital investment decisions. As a result, some businesses are hanging onto their older, more polluting vehicles for longer, which is having the opposite effect on air quality that we are seeking to promote.

“The reality is that full electric will not suit every business need, particularly in relation to payload, range and aligning charging cycles with what might be a 24/7 operation.

“For SMEs, it is important to weigh up the pros and cons for each type of vehicle; look at route planning, range requirements and the specific needs of your business, to make the decision that best suits your fleet.”

Fleets may favour hybrids over full electric until the charging infrastructure is adequate enough. Sam comments on the Europcar Mobility Group’s research: “Over a quarter

36

(28 per ent) of the smallest businesses (under 10 employees) said that they don’t think the electric charging infrastructure is currently adequate. Plus, a quarter of businesses of fewer than 10 employees don’t feel ready to adopt electric vehicles, currently. Perhaps not surprising then that Mayor of London, Sadiq Khan, has set out his strategy for improved charging in the London area.

But it can’t be London alone that sees this commitment. It has to be country wide before businesses become willing to take the step into the new drivetrain revolution.”

Sam believes that hybrid vehicles are the right stepping stone to full electric. She says: “With the right training for drivers in terms of driving behaviour, they can make a real difference not only to emissions but to cost for SMEs that are always needing to keep a close eye on their budgets.”

Duncan also believes that hybrid vehicles can be a good stop gap before full EVs are available; but only when correctly deployed. He says: “For urban usage or low mileage drivers, a PHEV is an obvious

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Making the switch to full electric For those that think full electric could suit their requirements, what advice would our panelists give before taking the plunge?

All our panelists agree that trying an electric vehicle before you buy is the right way to go.

Sam says: “At Europcar Mobility Group UK, we not only have a fleet of electric vehicles available for rent by the day; our E-Car Club all-electric car club also means that small businesses that want the flexibility of vehicle use by the hour can understand the efficiency of electric just by picking up a vehicle from one of the many dedicated bays around the country.

“A key challenge for SMEs is how to keep their people and their products on the road – without making long term commitments in a time of legislative and economic uncertainty. Savvy businesses are turning away from vehicle ownership, instead updating fleet vehicles like they might a smartphone because they want the latest models with the latest technology.”

Duncan points out that the longer you can try an EV, the better, to assess whether they are viable. He says: “Try and negotiate an extended demo so you can use and live with the vehicle for an extended period. You will not be able to establish if an electric vehicle is right for your business after a few laps around the block. What you need to be sure of is that the fuelling and infrastructure needed to run the vehicle is appropriate to your needs.”

Duncan also points out that a clear charging policy is also needed, and fleets should consider telematics to better schedule the deployment and downtime of vehicles.”

Stuart Thomas says that SMEs cannot afford to make mistakes, so they should take advantage of trials and consultancy support on offer. “Our advice for SMEs looking to move to full electric is to engage early with the vehicle manufacturers and charging companies. There is a real desire to share knowledge and experience, so SMEs should be able to take advantage of vehicle trials and extensive consultancy support when deciding which route is best for them. It makes sense to do a vehicle and route analysis, to decide which vehicles can be most easily replaced with full electric, and also where any charging infrastructure would be most effectively sited.

“Ask as many questions as you need in order to feel comfortable with your decision-making, get financial buy-in from everyone involved, and make sure that drivers are part of the process as they will be instrumental to the successful transition.”

While Clean Air Zones and other emissionsbased charges have produced a geographic impact in areas like London, the lack of consistency in the roll-out and how charging will be applied means many organisations are deploying a ‘wait and see’ strategy before making any capital investment decisions.

Admin burdens One of the major gripes from SMEs is the amount of vehicle management administration involved, generally because SMEs often don’t have the luxury of employing a full time fleet manager.

Duncan believes that leasing firms can lift some of this burden off SME fleet operators.

He says: “An SME may not have a dedicated fleet role. A leasing company like DFM can provide expertise, freeing you up to focus on your business. There is a lot to consider when running a fleet of vehicles; acquisition price, maintenance costs, tax, accident management, fines vehicle disposal and duty of care, to name but a few. This can be a real burden on SMEs both in terms of cost and time. Fleet management companies are set up to remove this headache so SMEs can focus on their core business.

“Through whole life cost analysis and a broader consultation we can also identify where apparent cost savings in one area could actually have negative consequences elsewhere. A long term and rounded fleet policy can be developed that the SME might not otherwise have had the time or expertise to develop.”

Stuart Thomas agrees that SMEs should get support from the industry. He says: “SMEs shouldn’t be afraid to ask their suppliers – lease companiess, insurers, roadside assistance providers – for help and advice.

It is in everyone’s interest to keep Britain’s businesses moving, and we’d recommend

UK SMEs make their voices heard when it comes to policy and decision-making.

“There is plenty of data and management information available for SMEs, but there are only as powerful as the people interpreting them. We’d recommend that SMEs bring on board experts to help them understand and act on the information at their fingertips.”

Sam adds that ‘mobility’ has added another dimension to fleet management.

She says: “Small businesses often do not have the time or resources to apply complex processes to manage employee mobility. This is another task to add to an already long list of administrative jobs that often fall to an already busy owner or manager who probably doesn’t have any fleet management expertise. Tackling this, Europcar has created a truly integrated multi modal solution which delivers a single point of access – and management – for all a business’s mobility needs, thereby reducing the pressure on a business to collect all the information themselves. Europcar One delivers the most efficient customer journey, from reservation creation, through the mobility service usage, to the point of invoicing. It gives customers a wide choice of booking options through a single login, whether it’s a taxi for a single trip or a six month rental of a brand new vehicle for project work.

“Plus it delivers the insight to help businesses understand and analyse how the use of different mobility solutions is impacting financial and environmental targets.” L

Stuart Thomas Fleets need more encouragement to transition to alternative fuels or a new generation diesel engine. The AA is keen to do everything it can to help businesses make this move, as are several other organisations and business groups. There is plenty of information out there for SMEs who need support. However, sometimes it can all feel a bit overwhelming. We think that SMEs should seek out advice on the type of fuels available, what would best suit their needs, and information on the infrastructure and services currently available to help guarantee fleet compliance.

SME Guide

Final thoughts

Sam Sterry Try before you buy is absolutely the right way to go when it comes to electric – especially for SMEs who will not want, nor have the funds, to make a full commitment without understanding the implications of electric. At Europcar Mobility Group UK, we not only have a fleet of electric vehicles available for rent by the day; our E-Car Club all-electric car club also means that small businesses that want the flexibility of vehicle use by the hour can understand the efficiency of electric just by picking up a vehicle from one of the many E-Car bays around the country.

Duncan Chumley An SME may not have a dedicated fleet role, instead relying on a manager from another discipline.

A leasing company like DFM can provide expertise, freeing you up to focus on your business. There is a lot to consider when running a fleet of vehicles; acquisition price, maintenance costs, tax, accident management, fines vehicle disposal and duty of care, to name but a few. This can be a real burden on SMEs both in terms of cost and time. Fleet management companies are set up to remove this headache so SMEs can focus on their core business.

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Company Car Tax

No tax on zero-emission company cars The government has recognised the value of company cars in supporting the transition to zero emission vehicles by announcing that drivers of electric vehicles will not pay BIK in the next tax year. But does this go far enough? We look at the industry’s reaction In its review of WLTP and vehicle taxes, the government has announced that company car drivers choosing a fully electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21. This will rise to one per cent in 2021-22, and then return to the planned two per cent rate in 2022-23.

For cars first registered from 6 April 2020, most company car tax rates will be reduced by two percentage points in 2020-21 before returning to planned rates over the following two years – increasing by one percentage point in 2021-22 and one percentage point in 2022-23.

The government’s response document says: “Appropriate percentages beyond 2022-23 remain under review and will be announced at future fiscal events. The government aims to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators.”

BVRLA director of policy and membership, Background Jay Parmar said: “Recognising the value of At the Autumn Budget 2017, the the company car market in supporting the government announced that cars transition to zero emission technology is a registered from April 2020 will be taxed positive endorsement for our sector, showing based on WLTP figures. WLTP aims to be refreshing alignment between government’s more representative of real world driving environmental and fiscal policies.” conditions, compared to the “The Treasury is giving back some of the previous test known as unfair company car tax windfall it was the New European set to receive as a result of WLTP Driving Cycle Compa ny and providing some essential (NEDC). c ar drive extra visibility on future tax As reported r s choosin costs for those looking to emissions g a fully electr order their next vehicle.” would increase, pay no ic vehicle will Existing VED rates will be this could benefit maintained on introduction of impact VED (BIK) ta WLTP from April 2020. A call and company x in 202in-kind 0 the gov for evidence will be published car tax, which ernmen/21, later this year seeking views on is why the t announ moving towards a more dynamic government ced approach to VED which recognises undertook smaller changes in CO2 emissions. the review. E Issue 122 | GREENFLEET MAGAZINE

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