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Finance director: guide to fleet management

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For the finance director to have the right insight, they have to provide fleets with the support they need.

That requires a steady flow of information that will enable fleets to make informed decisions about the strategic direction of the department.

Furthermore, it will avoid wasted effort in drawing up policies and plans that are torn up because the business has decided to adopt a different approach without the fleet manager being informed.

Debbie Floyde, fleet manager at Bauer Media, which operates around 500 vehicles, says: “I think one of the most important factors is to be kept up-to-date on the performance of the business.

“This includes any strategy that may be in place for growth, as the fleet department has to be one step ahead of the game.

“It is also important to share views. Fleets can have an isolated role and back up is all-important.

"Sharing the pain of an increase in daily rental spend, for example, may deliver finance-driven initiatives that a fleet manager may not consider.”

Caroline Sandall, fleet manager for Barclays Bank, which operates more than 3,500 vehicles, agrees, pointing out that the two departments are increasingly working more closely as they try to identify cost efficiencies.

She says: “I think the relationship is becoming more important because companies remain focused on cost control.

“A good working relationship will therefore pay dividends as finance should be in a position where they work closely with fleet to ensure that costs are under control and that fleet has access to the management information they need on key items.

“Data is clearly critical in the relationship as I rely on my finance colleagues to provide me with detailed management information that shows me the current status of my accounts.

“Without that detailed analysis, I would not know whether the P&L was breaking even or not.”

Overall, the two key themes that lie at the heart of a successful relationship between fleet and finance departments are communication and consistency.

Sandall adds: “Whenever we are considering making a change, we always ensure that finance are linked in, which avoids any surprises halfway through a process.”

Nigel Trotman, from Alphabet, agrees, pointing out that communication combined with trust also allows the fleet to operate more effectively in trying to deliver the finance director’s vision.

He says: “A key step the FD can take to help the fleet manager is to give them the authority to truly manage the fleet budget.

“Even if costs are allocated to cost centres, the fleet manager should be empowered to make the right decision for the business; for example in terminating cars early or reallocating them.

"Too often in my experience the wrong decision is made by someone at a local level because they do not see the full picture as the fleet manager does.”

But this autonomy can only be delivered with the consistency that is essential to a strong working relationship.

“As a fleet manager my plea to an FD would be to avoid changing the cost centre structure mid-year,” Trotman says.

“It’s one of the worst things an organisation can do to its fleet department because some fleet costs don’t arrive until months after they are incurred – and if you’re trying to allocate a cost to a cost centre that’s been closed you have a real problem on your hands.”

Dividing lines blurred

Although fleet and finance departments need to work together, their roles are becoming increasingly blurred.

Even before the recession, finance teams were becoming more actively involved in fleet decisions with some effectively transferring fleet responsibility to the finance director.

One survey of 470 finance directors carried out by Financial Director magazine revealed that while fleet managers were employed in 41% of companies among those interviewed, finance directors and controllers were directly responsible for fleet management in 72% of companies without fleet managers.

But this raises critical problems when it comes to managing the daily challenges of a fleet operation.

When asked about the biggest issues facing company fleets, many FDs cited the increasing burden of health and safety legislation.

As they lack the resource and potentially the expertise of fleet departments, there was a willingness to consider shifting out of company cars in favour of cash or alternative schemes.

There was also a greater readiness to consider full outsourcing of fleet management to an external provider.

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