For small and medium-sized enterprises (SMEs), perhaps the most time‑consuming and burdensome aspect of looking after a fleet is making sure vehicles are fit for the road. Fleet organisations should therefore have robust service, maintenance and repair (SMR) policies and procedures in place
Research from Allstar Fuel Cards has revealed that managers at small-medium firms spend an average of 32 hours a month on fleet administration, often with little supporting
knowledge and tools.
The research also revealed that 98 per cent of those accountable for fleets in SMEs are also responsible for many other tasks, such as general management, finance, sales, marketing and HR.
In terms of SMR, 65 per cent manually approve all service, maintenance and repair work and 82 per cent are getting no discount of any kind from suppliers on their service, maintenance and repair costs.
Against this backdrop, Allstar Fuel Cards has created a guide for SMEs on effective SMR for company vehicles.
Why SMR is important?
While SMR is a time-burdensome task, it must be performed to keep drivers safe and operations running smoothly.
Organisations running fleets have a legal responsibility under their duty of care to keep their business vehicles in roadworthy condition. This applies to the very smallest businesses as well as the very largest. If there is a serious accident and vehicle condition is found to be a factor, the owners and directors can be prosecuted and even imprisoned.
Fleet managers need to keep accurate records. Vehicle documentation such as MOT test certificates, insurance certificates and Operator Licences should be available in one place in preparation for audit and inspection by the relevant authorities.
What’s more, well maintained vehicles are generally cheaper in the long term. This is because they tend to perform at optimum efficiency, and because minor problems can be rectified before they become major ones if they are identified early on. Unplanned
maintenance increases vehicle downtime and costs. Plus, a vehicle with a full set of service stamps in its history will usually be worth substantially more when the time arrives for it to be sold.
An SMR policy
To get their SMR procedures in place, fleet managers need to establish an SMR policy as a crucial first step.
The guide from Allstar Fuel Cards advises that to implement this, you’ll need to gather some key information first.
Firstly, consider how often servicing is recommended by the manufacturer and what kind of suppliers you want or need to use – franchise dealers, independent garages or fast-fits?
Asks yourself if drivers regularly inspect their vehicles, and if so, how often? Have you provided them with guidelines on making an inspection and created a robust feedback mechanism?
Replacing key wear items such as tyres and brake pads often involves making a choice. Can you set a policy in this area? For example, you could decide that tyres will be replaced when there is 3mm of wear left.
Fleet managers should also think about what management tools might be useful in managing the fleet, such as spreadsheets, white boards and specialist fleet software systems.
Do you have auditable systems in place to prove that all of the above is happening? If you are investigated by the Health and Safety Executive in the event of a serious accident, an auditable trail to prove that a vehicle has been kept in good condition will form an essential part of your defence.
Finally, the value for money from suppliers should be considered, as well as whether you can gain greater control over payments and billing.
A supplier should be chosen that best fits your business. The location should be looked at to understand whether it is convenient for your drivers and for the operation of the vehicle and your business.
You will need to consider if the supplier offers good value, how available they are, and if a courtesy car will be available. The supplier’s capabilities need to be looked at; can they carry out the work required to a good standard? For example, a complex or unusual vehicle may require diagnostic equipment only available at a franchise or specialist dealer.
Finally, you should have a good relationship with the supplier, so that they can be relied upon to fix a vehicle quickly, and to charge fairly and transparently.
When it comes to company car and van SMR, there are two main areas where you need to consider how much responsibility you want drivers to take, the Allstar Fuel guide advises. Firstly, should drivers have a role in booking work and then paying for it? How should the driver pay, with a company credit card or through pay and reclaim, where the driver pays personally and reclaims through company expenses?
Secondly, you should consider in which ways drivers should be helping you meet your legal responsibilities?
In some small-medium business fleets, especially those that operate on a national basis with a central head office, the entire responsibility for maintaining vehicles is passed over to the driver – they monitor when a vehicle needs servicing or repair, choose the supplier then make the payment and reclaim the cost.
Passing responsibility to the driver is normally not a good way of managing SMR, simply because it means that you are abdicating control in virtually every area. There is no way of ensuring that the work being carried out is actually needed, that suitable suppliers are being used, that you are meeting your legal responsibilities such as timely MOTs and servicing, that the duty of care is being met, that consolidated invoices can be supplied, and that the business is not being defrauded.
Instead, Allstar Fuels believes that the person responsible for managing company vehicles should keep records that indicate when service and maintenance is due, and should stay on top of the administration for vehicles on the company’s behalf, keeping control of all the key aspects.
However, it is very important that drivers are made responsible for monitoring the basic condition of their vehicle on a day-to-day basis. This is something that is part of health and safety guidance.
Researching the price
It can be difficult to know whether you are getting value for money when it comes to the cost of servicing and maintenance.
Research from Allstar Fuel Cards shows that fleet budgeting for SMEs is based largely on experience and expectations of what seems acceptable, although this is usually based on nothing more than personal opinion.
The fact is, for many small-medium businesses, researching this kind of pricing is not easy. You can try looking online for typical prices but comparing information in a like-for-like manner is tricky. In many ways, the best that you can do is follow the tried‑and-tested formula of asking for three quotes from different suppliers, even though this can be time-consuming.
One of the most difficult financial aspects of SMR is that unforeseen jobs will often occur during planned maintenance that require approval. For example, during a routine service, it could be identified that new tyres are needed.
Research from Allstar Fuel Cards shows that 65 per cent of managers with company vehicle responsibility in small-medium businesses manually approve all service, maintenance and repair work by phone or e-mail, but that they find it, understandably, very time-consuming.
Other methods of approval are occasionally used. Some have a key system of control that requires approval if any bill is more than £500 for example, but a few simply pay whatever bills appear.
The fact is that like trying to ascertain whether an SMR price is good when booking a job in the first place, assessing the fairness of additional work is simply very difficult and most businesses have little choice but to agree. Allstar has conducted analysis of transactions and found that around 11 per cent of jobs completed by garages are not needed – and that these jobs cost an average of £48.
Research from Allstar Fuel Cards shows that paper invoicing systems remain the norm when it comes to paying for car and van maintenance. However, this is a process that is prone to error, time consuming and even open to employee fraud.
A much better choice is to use electronic, centralised invoices from suppliers, which will allow you to process payments quickly and easily, as well as seeing what work has been completed at a glance.
A few companies still use driver pay-and-reclaim which is not recommended. It leaves the driver out of pocket for a while and the employer open to fraud, with little centralised control.
A key point is that you need to ensure that all invoices you receive are genuine VAT invoices and are fully HMRC compliant.
Relatively few small-medium businesses use specialist management tools to look after their fleets, according to Allstar Fuel Cards. Instead, they use a combination of whiteboards; Excel spreadsheets, filling systems and Outlook calendar reminders to show them MOT and service due dates and expenditure.
The success of looking after your fleet in this way very much depends on the quality of processes that you put in place, but even the best will provide only limited means of control and little genuinely
useful management information.
Notably, using all of these methods is labour intensive, requiring many man hours and extensive manual keying. They are also prone to user error.
However, there are a wide range of software management tools available on the market for small-medium businesses that provide a good management structure for looking after SMR and all other aspects of company vehicle management.
The quality and sophistication of software management tools vary quite widely, as does their cost and effectiveness, and the initial setting up process can be quite time-consuming. Once in place, though, they will deliver a level of management control and information that is simply not possible using a spreadsheet or paper systems.
SMR is not an easy subject for small-medium businesses – but it is one that can be tackled much more successfully with a sensible and structured management approach.
The guide from Allstar Fuel Cards urges SME fleets to create a framework and adopt subsequent strategies that will reduce the amount of time you spend dealing with service and maintenance while, at the same time, delivering much better results.
As a result, your vehicles – and your employees – should operate in a manner that is increasingly cost-effective, safer and more compliant.