Funding: Facing the challenges

In 2009, funding was a primary concern for many fleet managers with issues over access to funds, contract hire rates and manufacturer price rises.

The banking crisis, recession and fall-out from the 2008 residuals value slump was a triple-whammy that saw lenders tighten their terms and leasing companies become more choosy about their fleet relationships.

However, the picture this year is very different, despite little change in the economic landscape.

A Fleet News survey of 111 fleet decision-makers suggests that, while economic conditions remain difficult, funding is no longer giving them a headache.

The majority (60%) of respondents say they currently have no funding issues.

This is based on the views of fleet managers that lease, outright purchase and use other forms of funding.

Their views are in keeping with reports from suppliers in the fleet market who also say funding circumstances are improving. But what about those fleet managers that are having issues?

The survey identified the most common are leasing rates, service levels from their leasing provider, access to funding, managing more than one leasing company and choosing the right funding method.

The issues posing less of a problem are changing funding method (after the method has been chosen), choosing the right funding provider for the fleet, interest rates on finance, and managing more than one funding method.

A little more probing reveals that challenges with leasing rates can range from being able to get a good deal to understanding why rates vary so much.

For service levels it can be issues over end-of-contract damage charges and the fleet manager’s interpretation of minor damage compared to the leasing company’s view.

Other complaints include the leasing provider not getting a vehicle back on the road quickly enough when maintenance is included in the contract.

Access to funding isn’t an issue mainly facing outright purchase fleets.

A higher proportion of contract hire fleets said it is a challenge for them.

Choosing the right funding method can be a headache for fleet managers because they are not financial experts and there are many forms of funding to choose from.

That challenge increases considerably if the fleet uses multiple lenders.

Managing more than one leasing company presents other issues, too, such as extra administration, the potential for driver confusion over who to contact to order new vehicles or report an accident, and having differing contracts and reports.