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Avoiding the small business hard shoulder

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For small enterprises, running a fleet of vehicles can be a financial and administrative burden, particularly as there is unlikely to be a dedicated fleet manager.

Adrian Waters, general manager in commercial sales at AA Business Services, offers some tips for SMEs on how to comply with imminent corporate manslaughter legislation, whilst streamlining the costs associated with administering both breakdown policies and fleet maintenance:

The introduction of corporate manslaughter legislation in 2007 will mean an organisation, or a senior individual within the organisation, being prosecuted for management failures that lead to the deaths of employees. So for small businesses running a fleet, it’s vital that employers fulfil their duty-of-care obligations by ensuring vehicles are roadworthy.

Whether employees are driving a company car, a vehicle purchased through a cash-for-car scheme, or using their own car for business use, the new legislation will make it the employer’s responsibility to ensure the vehicles are roadworthy. If companies are going to let employees use their own cars for business, it is the employer’s responsibility to ensure employees are making the following essential safety checks:

1. The car is roadworthy and has a current MOT (if more than three years old)
2. The driver is licensed to drive

1. The vehicle is insured for business use

1. The car is regularly serviced

1. The employee is carrying out basic maintenance checks such as oil, washer fluid, tyre pressures

1. The employee has membership of a roadside recovery organisation

Most businesses recognise the need to provide breakdown assistance for their company car drivers but don’t make sure that others, on cash-for-car schemes for example, have the necessary cover. If breakdown cover is essential for a company car driver, then surely it is vital for any employee driving on business. Our research shows that a quarter of them do not have any.

It is not just the cost to business in terms of risk that needs to be considered should a vehicle break down, but also the financial costs in terms of lost time through employees being off the road, dealing with breakdown queries and in some instances, having to provide replacement vehicles. On average, 56 per cent of people driving for business break down every year compared to just 12 per cent of private motorists - and 25 per cent of drivers still don’t have any breakdown cover at all.

Co-ordinating a fleet’s breakdown cover in-house can be problematic, both for reasons of cost and in the time it takes to administer. However, there are flexible packages available for SMEs to cover both small and large fleets under one policy. For example, the AA has a package called AA Fleetwide. By providing bespoke breakdown and recovery services across the fleet, it removes the administrative burden, thereby freeing employers up to run the business.

Organising breakdown cover is not the only area which can be a burden. General administration of a fleet is costly and tracking expenditure can be difficult, particularly when employees present expenses, such as fuel, retrospectively. In a larger organisation, a fleet manager would check that mileage claims are accurate, but in an SME, this often isn’t this option, meaning that employees are able to exaggerate fuel bills, sometimes by as much as 25 per cent.

One solution is for fleets to introduce fuel cards with pre-agreed credit limits. This method still allows employees to claim back VAT, whilst helping the business maintain closer control over employees’ costs.

Some cards, such as the AA’s Fleet Advantage, also have a credit facility to pay for car servicing. A credit limit is authorised by management, so should an employee need urgent repairs, the necessary work can be done promptly, thereby keeping the vehicle on the road and saving the business time and money. The card also reduces the paperwork burden by producing online reports detailing where the card facility is being used and by whom. So the card acts both as a credit facility and a management tool for streamlining costs.

By ensuring that employees’ vehicles are roadworthy and covered in the event of a breakdown, or accident, an employer will be contributing towards their duty-of-care obligations and securing peace of mind that their employees are safe when they are out on the road.

In a small business where margins can be tight, the thought of spending money on software or outsourcing work may seem daunting. However, by making seemingly small changes to the way that the fleet is administered, the result could be large cost savings in the time spent on unnecessary administration and improved efficiency through effective management tools and reporting.

For more information about AA Fleetwide or the AA’s Fleet Advantage card click on the link.
http://s0b.bluestreak.com/ix.e?hy&s=3086847&a=3786581

Posted February 2, 2007