CommercialFleet

'No magic funding formula' for commercial vehicle funding

Vans

Commercial vehicle fleet decision-makers must undertake detailed planning and have a clear vision of what they want to achieve in an ever-changing environment, but there is no magic funding formula that fits every organisation.

To help light commercial vehicle fleet decision-makers identify the most appropriate vehicle funding method for their business, Lex Autolease experts will be running a best practice seminar at Commercial Fleet Van & Truck and take seminar delegates through the pros and cons of each of the mainstream options.

Lex Autolease has around 325,000 company cars and light commercial vehicles on its books, of which almost 25% are vans.

The three main commercial vehicle funding solutions available are contract hire, contract purchase and finance lease. Additionally, Lex Autolease offers a mini-lease solution for hire periods of up to 12 months.

Historically, outright purchase was the preferred method for the vast majority of businesses but demand for vehicle leasing has accelerated rapidly in the last decade or more, led by large organisations.

What’s more, increasingly small and medium-sized enterprises are also moving away from outright purchase as they too seek budgeted fixed cost monthly motoring, and away from having their own valuable cash tied up in depreciating assets such as commercial vehicles.

That’s partially influenced, says Lex Autolease, due to the ever-growing trend of using the internet to seek out value for money deals.

In recent years large organisations have also typically opted for contract hire funding solutions married to outsourcing the in-life management of light commercial vehicles thus benefiting from a comprehensive ‘cradle to grave’ service. Again, it is a trend being followed by smaller organisations without the internal resource to focus on day-to-day management.

Although contract hire is the number one funding solution, Lex Autolease says contract purchase remains a popular option for some fleets particularly due to the ability to obtain full VAT recovery upfront.

Lex Autolease experts will guide seminar delegates through the advantages and disadvantages of each funding option with a focus on: company cash flow, VAT treatment, capital allowances, corporate balance sheet implications, financial and residual value risks and total outsourcing.

During the seminar, delegates will also be able to learn more about the impact of the new lease accounting standard which becomes mandatory from January 1, 2019 for organisations reporting under International Financial Reporting Standards.

The International Accounting Standards Board (IASB)’s new approach is intended to bring all assets funded by operating lease (including contract hire) onto a company’s balance sheet, giving a more complete picture of a business’s financial commitments and thus greater transparency as to the financial health of any organisation.

Lex Autolease is one of six best practice partners featured at Commercial Fleet Van & Truck, further details on the sessions can be found at https://vanandtruck.commercialfleet.org/for-visitors/fleets-informed-best-practice-sessions

Fleet operators can register for their free place at Commercial Fleet Van & Truck by visiting www.commercialfleetvanandtruck.co.uk

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