Building a Commercial Fleet – A Guide

Building a commercial fleet effectively is key to success for so many entrepreneurs who need commercial vehicles to move goods and services around.

If you make the right choices you can soon grow from one vehicle to a whole fleet and a turnover of millions. Acquiring modern, well-maintained, cost-effective and tax-positive vehicles is the only way to do this.

Business owners will be aware of the many challenges of acquiring the right assets to succeed and this is amplified in the high-cost world of commercial vehicle purchase. This guide is here to help you make the right decisions.

Choosing the right vehicles for your commercial fleet

Choosing the right vehicles for your commercial fleet essential boils down to two questions – what are the vehicles going to be used for and how are you going to fund it (at purchase and on an on-going basis)?

To select the right model, or model range, the main consideration is what you need to transport but there are other factors to look at such as the distances to be travelled, loading and unloading, fuel consumption and ease of maintenance.

You don’t want a cheap vehicle that makes it hard for your staff to unload goods from or is impossible to maintain without specialist services. If the fuel costs aren’t within your budgets that will also be a huge problem for your business.

Small to medium-sized vans, like Transit vans, are perfect for field service engineers and small delivery crews in urban areas. These are by far the most common working fleet's in Britain.

Consider Tipper trucks or dropside vehicles, for easy all-round access, when dealing with bigger loads. Luton vans are also a great option for larger loads.

You may need to look at further customising your choice of commercial vehicle. Do you need to carry refrigerated loads or provide access to people with mobility issues? Some businesses have even thought outside the box and held concerts from the side of trucks.

Whatever you want to do, look at the possibilities of amending the vehicle to suit your needs.

Funding your commercial fleet

How you are going to finance your fleet is, arguably, more important than choosing the right vehicles (although choosing the wrong vehicles will make financing that bit harder). Depending on whether you want to own an entire fleet or not, there are generally four finance options:

1. Contract hire – You never own the vehicles, keeping them off your balance sheets, but with the repayments, they can still be offset against tax. If you are VAT-registered, all VAT can be claimed on vehicles only used for the business. Personal use reduces the VAT claim.
   
   This deal suits smaller businesses that cannot afford to own vehicles outright, and also doesn’t want to commit to protect against changes in their trade and business dealings.
2. Contract purchase – You’ll pay for your vehicles through regular instalments and will, ultimately, own the vehicle outright. Repayments are not subject to VAT and there are no mileage limitations as you would get with contract hire.
3. Finance lease – If you want more flexibility than contract hire, you could enter into a second rental period for a small annual fee and continue to use the vehicle after the first contract has ended.
4. Lease purchase – Similar to a finance lease but with the added option to buy the vehicle outright. Again, this means no mileage restrictions. You can keep payments low by agreeing to a “balloon payment” at the end of the lease to settle the balance.

There are many different finance providers and offers on the market so you may want to consider using a finance broker that specialises in commercial vehicle finance to help guide you through the options and secure you the best deal.

Maintaining your commercial fleet

As the owner of a commercial fleet, the costs don't stop at purchase, and the on-going running and maintenance costs are something you need to seriously consider. This is a simple list of the costs you need to research and consider.

• Servicing, repairs and maintenance
• Fuel costs
• Fleet insurance
• Business fleet tax
• Staff costs – salaries, National Insurance payments
• Fleet management software – such as vehicle trackers

Researching and effectively managing these costs will be essential to the success of your commercial fleet.

Whatever you are building a commercial fleet for, this guide should be a good starting point for your business to make it a success.