For many organisations, the physical cost of getting employees to and from customer sites, meetings, training and other commitments is second only to payroll. Unlike payroll costs, however, you won’t see a smooth but gentle line increasing over the years for a fleet. You see spikes in motoring spend fuelled by more influences outside of your control than those factors within it. And speaking of fuel, fuel spend is one of the largest component parts but it’s one of the simplest to make savings on.
Let’s take the simplest first. If you have employees using their own car and being reimbursed at 45ppm you are undoubtedly giving money away, in addition to taking a huge grey fleet risk. The first thing to bear in mind is that reimbursing employees at 45ppm (pence per mile) is literally incentivising them to drive! If an employee is driving from Birmingham to Newcastle and back, you’re giving the employee £180 plus 6 to 8 hours of M1 stress. That’s one hell of an unproductive day for everyone concerned and the driver will make a huge £140 profit on the fuel cost!
The 45ppm set by HMRC for very occasional short trips to compensate for fuel and wear and tear but just doesn’t stack up when the employee drives longer journeys. In fact, you could hire a car and reimburse fuel at the exact cost for around £70 maximum, meeting your duty of care and keeping your team safe. Better still a train ticket, slightly higher cost depending on when you book, typically £90 plus a £10 taxi at the other end but the value of 6 hours of work on the train (just over 3 hours each way) is huge, travelling doesn’t need to be non-productive. In fact, you could send employees first class for the same cost as the fuel reimbursement!
You may also want to consider that around 60% of all journeys are deemed as unnecessary, easily overcome by good video conferencing or better diary planning. We at Fleet Evolution generally always try to book meetings when we are local to you and in 70% of cases manage to achieve this just by asking the question.
If you have a company fleet then you don’t need to worry about 45ppm but if you have as few as 10 company cars, covering 10,000 business miles a year you’re spending typically £42,000 on fuel every 3 years. You could cut this by more than half, simply by moving to electric, the cost of the car to you is the same and this includes fast charge points at work. Modern electric cars easily cover 230 miles plus between charges, which accounts for over 92% of all work trips and you could fund hire cars where longer trips are made and still cut your costs to below £20,000. Of course, it’s simple to charge while on the go, you can read our blog on charging infrastructure here, but we need to introduce your team to this slowly and offer alternatives where a mid-trip charge stop may be needed until they and you become comfortable. Your team will also enjoy a typical company car tax of just £20 from 2020, as opposed to a typical £90 now for petrol’s and diesel’s and if it’s through us they can swap for a diesel for family holidays/excursions and get free charging at home too!
There are lots of ways to cut your fuel bill, these are a few, if you don’t want to manage the changes yourself, we can happily manage this for you but make the change, today!