The current economic downturn may have pushed fuel and vehicle costs lower for the time being but that’s not going to outlast the first signs of improvement. If you want to avoid being held hostage by increasing fuel costs and government imposts in the future it’s time to look at how you can manage your vehicle related business costs now.
Limit the use of company vehicles to company work
Allowing employees to use company vehicles for private jobs or to take home for the weekend is opening you up to large scale abuse - and has Fringe Benefit Tax implications. They are burning through the company's fuel and putting a lot of wear on the vehicle.
Claim all mileage allowances and vehicle related expenses
People using their private vehicle for business journeys can claim tax free expenses for that journey. Most small businesses could legally increase their tax allowance claims simply by keeping better records of their business related journeys. Log each day’s journeys and any vehicle related expenses incurred during the day. Put the information in a spreadsheet for your accountant to use at the end of the year so you don’t lose track of the real amount expended and short change yourself.
Keep your vehicles properly maintained
Poorly maintained vehicle can boost fuel consumption by up to 15%; a clogged air filter by 10%; just one 8 psi (56 kPa) under-inflated tyre can reduce its life by 15,000 kms and increase fuel consumption by 4%. The type of tyre used can have a dramatic effect on fuel efficiency and vehicle running costs - on-the-road trials of newly developed ‘green tyres’ have resulted in major savings by companies that have invested in them. Keeping your vehicle in top operating condition saves fuel and money, keeps it reliable, preserves resale value and reduces long term maintenance costs.
Consolidate your trips
Plan errands and deliveries so that you do them together, rather than as separate trips. Schedule deliveries in particular areas for particular days. Invest in a Sat Nav and plan the daily run to take the shortest overall distance or most efficient route instead of zigzagging between destinations.
Look for fuel bargains
Some Chambers of Commerce offer fuel cost savings as benefits to their members and numerous supermarkets have fuel discount-for-purchase deals going with various petrol stations - or even their own.
Check out the range of alternative fuels available – maybe a conversion to LPG is in order - although not what it used to be. Or use a low ethanol mix fuel suitable for standard engines. Find the cheapest outlet using one of the internet sites that track fuel prices.
Lease your vehicles
There are advantages in leasing over outright purchase such as: no huge down payment; fixed, known monthly payments; getting exactly the type of vehicle you want; and even reduced maintenance and servicing costs. There may be tax benefits as well. There are, however, some potential disadvantages to leasing over purchase, the most obvious one being that the vehicle is never owned by you. The maintenance agreement can run against your interests as well, making you responsible for too many of the costs. Lease vs hire is one of those situations where you need to do the maths carefully and get a number of quotes (ensure they are comparing like with like) before making the decision.
Minimise insurance coverage costs
Your commercial car insurance should be a business tax deduction and a proportion of your personal car insurance should come off your business taxes also if you are using it for business related purposes. Different companies can charge very different premiums for the same coverage – do some price comparison checking on your vehicle insurance needs.
Use the most efficient vehicles for the purposes you are putting it to. Doing the bank run in the company truck is not efficient. With the government's stance on the environment, eco-friendly vehicles that improve fuel economy and reduce road tax are becoming more appealing. Lower emission vehicles are now available in all types of vehicle from small runarounds through commercial light duty up to heavyweights weighing 80,000 - 150,000 kgs gross vehicle weight.