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The 6 Ways to Maximize Your Commercial Fleet Cash Flow

Posted by Wilmar, Inc.

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How do you maximize your commercial fleet cash flow as a business enterprise? Are you using the right commercial fleet to optimize and lower operational costs.? The biggest challenge to running a profitable business enterprise is the sustainability of a positive cash flow. Consistent cash flow protects businesses operating large fleets from financial challenges and other unforeseen expenses to maximize profits.

This article looks at ways enterprises operating commercial fleets can streamline their operations and sustain a consistent cash flow to generate more revenue and grow their business.

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Here are ways to maximize your commercial fleet cash flow;

1.    Determine the Total Cost of Ownership

The most comprehensive and challenging aspect of fleet cost management is determining your total fleet cost of ownership (TCO). Understanding your TCO enables you to optimize and streamline your fleet by making data-driven decisions.

Fleet costs are divided into Variable and fixed costs. Fixed costs are ongoing costs that never change regardless of asset usage.

Here are examples of fixed costs that impact your fleets cash flow and ways you can utilize them to maximize your cash flow;

Taxes

Leverage the fleet leasing tax law by collaborating with industry experts to evaluate if your fleet structure meets the immediate return requirements.

Licenses and permits

You must obtain the required licenses and permits for your fleet to be legally on the road. These can substantially impact your bottom line. For example, insurance costs will vary from one service provider to another. Shop around and opt for the cheapest service provider to save on cost.

Depreciation

Depreciation can't be avoided, however, you can slow down the depreciation rate. Regular maintenance ensures your fleet is in good operating condition to offset depreciation. Depreciation accounts for 40% of a vehicle's operational cost.

Loan and Lease Payments

Reassess your loan and lease payments to generate more cash flow than expenses. With the rising interest rates, opt for fixed-rate interest leases over floating-rate leases to create more working capital. Always double-check the end-of-contract charges to the vehicle's condition when leasing vehicles.

2.    Optimize Your Fleet Size

Every business model is unique hence different needs. Businesses need to purchase commercial fleets that suit their business model. The specifications and size of your fleet are dictated by fuel prices, size, budget, climate, access to charging stations, and driving distance. Choosing the wrong type of fleet will impact your cash flow.


3.    Manage Fuel Expenses

Fuel is the most significant operating expense affecting a commercial fleet's cash flow. While controlling the fuel price is not possible, containing the fuel expenses can significantly boost your cash flow. According to a study, fuel accounts for 60% of a commercial fleet's operating expenses.

Fuel is a variable cost, and its essential to monitor the consumption and cost of each asset. Tracking fuel expenses lets you determine the average cost per mile to forecast future expenses.

4.    Develop a Vehicle Replacement Plan

Frequent vehicle replacement may seem like an unnecessary cost to the fleet budget. Retaining vehicles to their old age impacts your cash flow. Operating vehicles past their economic life results in high maintenance costs, lower utilization, and increased fuel costs due to reduced fuel economy.

5.    Refine Your Fleet Maintenance Plan

Maintaining your fleet saves you money on parts replacement and costly repairs to maximize your cash flow. Develop in-depth knowledge of your fleet's mechanical and technical aspects. It enables you to decide which vehicles to use, upgrade or replace depending on the operational costs to help you maximize your profit margins.

6.    Utilize Advanced Telematics

Adopting a state-of-the-art fleet management solution optimizes and streamlines your fleet operations to save on operational costs, significantly boosting your cash flow. Monitored telematics attracts reduced fuel costs, insurance premiums, and wear and tear to save on your cash flow.


As a business enterprise, are you looking to cut operational costs and maximize cash flow? Do you want to lease a fleet that suits your business model? Get a free analysis, or schedule a call today. We have comprehensive fleet solutions and custom fleet vehicles to suit your business needs.

Contact or connect with us today on LinkedIn, Facebook, or Twitter. Our agile team is on standby to develop the right fleet management solution. 

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Topics: Fleet Management, Fleet Financing, Misc

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