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22 May 2019

Should you finance your pest management vehicle fleet?

Business feature | PPC95 May 2019

Leasing is rapidly becoming the go-to mobility choice for businesses running commercial vehicles. There are three key reasons why: cost, compliance and choice. We asked LeasePlan, a commercial vehicle supplier, to talk PPC readers through commercial vehicle leasing.

Deals on wheels

When compared against outright purchase, fleet vehicle leasing can offer:

  • More visible, predictable fleet costs
  • More readily available cash to pour into your business
  • More desirable, efficient, safer cars and vans
  • More time to focus on your day job
  • More power to deliver on your business’ goals.

At the same time, leasing can also leave you with a lot less to worry about – like the risk of your valuable assets depreciating, the cost and hassle of handling maintenance, and the need to fulfil your duty of care to your drivers.

But when your business has always bought its vehicles outright, leasing can seem like a journey into the unknown.

There are plenty of vehicle financing options available. The key is finding exactly the right option, or mix, for your specific needs.

The options can affect everything from the amount of risk your business takes on, to the size of your monthly leasing payments – and they could also have an impact on your VAT and Corporation Tax bills, as well as your immediate cashflow. A good leasing provider will use expertise to help you negotiate this complex decision, and arrive at the solution that’s right for your fleet.
Here’s a brief overview...

Contract hire

Contract hire is one of the most popular methods of funding for small to medium-sized businesses. It’s also one of the simplest. You hire the cars or vans you need for a fixed term, with a fixed mileage allowance, for fixed monthly rental.

You agree on the term, normally between two and five years, and how many miles you expect the vehicle to cover. Your leasing provider will expect you to pay a fixed cost for every mile travelled beyond the agreed allowance, covering them for any extra wear, and its impact on resale value.

Contract hire is popular as there is a chance to:

  • Recover and spread VAT costs
  • Make predictable monthly payments
  • Include your maintenance costs
  • Not worry about depreciation risk.

A good leasing provider will help you negociate a complex decision

Finance lease

A finance lease model also lets your business lease its cars and vans for a fixed monthly fee – but unlike contract hire, it also transfers the risk, and potential rewards, of ownership to your business.

It comes in two distinct versions, and which one you want will depend on the shape of your cash flow:

Finance lease (fully amortised) – your lease rental payments are based on the full costs of your vehicle and aren’t adjusted for expected residual value.

Finance lease – your lease rentals are based on part of the cost of your vehicle, with a balance offset until the end of the agreements – allowing for smaller rental payments along the way.

Contract purchase

Like contract hire, a contract purchase model for your business can offer cars or vans for fixed monthly payments, for fixed terms, and with fixed mileage allowances.

But unlike contract hire, and finance leasing, you get the option to purchase the car when your agreed term is up.

The downside? You can’t usually recover any VAT, and it must be paid upfront.

CASE STUDY: Driving business growth with Ecolab

Commercial vehicles play a vital role in the growth of many companies. Working in conjunction with Peugeot, LeasePlan UK provided environmental services firm Ecolab with a fleet of vans and cars to support their growth and development in the UK and Ireland.

Ecolab provides pest management, water, hygiene and energy technologies to a range of industries and their fleet is around 400-strong. Over three-quarters are used by on-call technicians in the pest-control division, which means the vans must all be available 24-hours a day.

As part of the four-year contract, LeasePlan have carried out a specialist racking conversion on the vans, so they can operate safely and carry the hardware and materials needed by these specialists. LeasePlan are also providing maintenance and accident management on the fleet as an integral part of the contract.

Mark Lovett, Head of Commercial Vehicles LeasePlan UK commented: “We pride ourselves on supplying our customers with the best vehicles that suit their specific business needs. The commercial vehicle market is growing, and we know how important it is for companies to know they can get vehicles that come equipped with everything they need.

“We’re working with Ecolab to ensure their fleet is operating as efficiently as possible to support its key business objectives now and in the future, especially as we consider the shift to electric vehicles. We hope to achieve this through our expert consultation, alongside maintenance prediction and monitoring, to ensure a more proactive approach is taken to help Ecolab prepare for, and mitigate against, any disruption.”

Leasing with LeasePlan Direct

With over 65,000 commercial vehicles, LeasePlan is one of the largest providers of commercial vehicle leasing in the UK. Whatever the size of your business, LeasePlan can help find the right vehicles for you, taking the time to understand how you’ll use the vehicle, as well as discussing the best leasing options for you.

LeasePlan also knows how important it is to keep your pest control vehicles on the road - and that’s why they’ve designed tailor-made services that will do just that.

BPCA members can benefit from LeasePlan’s expertise, including access to a wide range of benefits including an all-inclusive maintenance package, specialist tyre providers, specialist roadside assistance, mobile and overnight servicing and tyre replacement – all designed to help maximise your vehicle uptime.

MORE INFORMATION

leaseplan.co.uk

Source: PPC95

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