A guide to fleet finance for SMEs

With every company fleet there are numerous factors to consider. Whether it’s the cost, the environmental impact or the size, it is important to make sure you have the correct fleet management strategy in place to suit your business needs. EVP Solutions has put together a brief guide for small and medium enterprises looking to outsource their fleet management.

Fleet financing options

When considering your fleet management strategy, it is important to know what you can afford. Fortunately, EVP Solutions offers expert advice on fleet financing and fleet strategy. So be sure to get in touch to discuss your options. Popular fleet financing methods available for small and medium enterprises include:

Contract hire

The most frequent type of fleet financing is contract hire. It is a type of operating lease that includes a fixed-price maintenance package as an option. The car is priced for a specific term (typically between 24 and 60 months) and mileage at the start of the contract. 

Because you only pay for depreciation while the asset is under your control, premium cars are frequently chosen because they maintain their value. With contract hire, your monthly payments are determined by the original cost of the car minus the cost at the end – making it a highly cost-effective option.

Contract purchase

Contract purchase is similar to contract hire, however, it includes an optional “balloon payment” at the end of the contract that allows you to take full ownership of the vehicle. This choice can be more expensive, but it gives you more options.

Hire purchase

If you know right away that you want to own the vehicle at the end of the agreement, a hire purchase may be the best option for you. This involves putting down a deposit and then paying the remaining balance in monthly instalments. At the end of the agreement, the full cost of the car has been paid and ownership of the car transfers to your company.

Salary sacrifice car

Employees can trade a portion of their salary for a non-cash benefit-in-kind through salary sacrifices, such as a car. The most beneficial car salary sacrifice funding is for low emitting cars (currently 75g/km of CO2 and under), where the full tax benefits of salary sacrifice can be applied. Additional benefits are offering cars to all employees and supporting the CSR objectives of the business by offering low emitting cars to all employees.

Outright purchase

Purchasing is typically funded through borrowings or the company’s cash resources and, when sold, the company then receives the full amount of the sale proceeds. This is attractive for some businesses as they have full ownership of the fleet, and still have the option to outsource the management. However, for some businesses outright purchase may not be financially feasible as it locks in working capital or cash reserves to the fleet asset.

Find out even more about fleet financing options by speaking to a member of our team.

Financial guidance 

You may be wondering how outsourcing fleet management might help your business. In fact, there are many advantages that can help you save money, time, and operational resources in the long run.

Reduce repair costs

By outsourcing your fleet management to EVP Solutions, we will dedicate time on ensuring preventative maintenance for your vehicles is in place. Preventative maintenance can help you avoid more expensive and time-consuming repairs in the future and you’ll end up paying less money over the life of your fleet. 

Free up internal resources

Adopting fleet management in-house comes with a host of responsibilities. Save yourself one or several full-time salaries by outsourcing your fleet management to an expert. That way, you will free up your budget for more other business projects.

Less asset investments necessary

When companies take on fleet management in-house, they often have to spend money on software, tools and training. This can become costly, and can easily be avoided by outsourcing to an experienced fleet management company who already have all the necessary resources in place. 

Need help financing your company fleet?

EVP Solutions has been providing their clients with fleet finance advice and guidance for several years. To get in touch with a member of our team, contact us on 0161 973 8579 or send us a brief introductory email at hello@evpsolutions.co.uk