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Significant increase in fleet operators looking to improve cash flow

Significant increase in fleet operators looking to improve cash flow

Fleet operators in the commercial vehicle sector are challenging conventional thinking and business practices. This is according to John Loxton, WesBank Head of Fleet Management and Leasing.

“The world has changed from the days when corporate truck operators used to manage all operational functions themselves. We have witnessed an acute awareness of managing a business as prudently as possible and this includes challenging the way customers transact around the purchase, maintenance and disposal of commercial vehicle fleets,” says Loxton.

“Full maintenance leasing offers corporate fleet operators the ideal mechanism to achieve real cost savings and to improve their cash flow. That is perhaps why we are seeing such a significant increase in the number of fleet operators talking to WesBank about reducing their cost base.

“We need to be asking whether the fleet operator or cargo owner requires the physical truck to get their product to market or if they merely require the capacity offered by the vehicle? A logistics company could possibly consider ownership as a necessity but in reality, they are only selling the capacity and ability to move such capacity between distribution centres and to customers in terms of the use of their commercial vehicles,”Loxton continues

Reducing monthly costs is fairly complex as it involves discipline and proper management and accountability within the operations of the fleet operator. The cost of leasing will be reduced over time as long as unnecessary use of the vehicle is avoided and the asset is properly looked after. Leasing or long-term rentals is one way of securing a good deal and we are in an excellent position to offer customers the best deal by applying our superior fleet management skills and knowledge to the benefit of our customers.

The reduction in overall cost will be a function of evaluating and comparing leasing as an alternative on the basis of a discounted cash flow analysis in order to identify the most suitable funding method that would offer the lowest after-tax cost over time.

“The world as we know it has changed and fleet operators in the commercial vehicle sector will have a keen interest in preserving existing cash flow and the overall cost management in the months to come,” he concludes.