Stuck in a boardroom for hours, discussions going round and round, lunch gets brought in, followed by texts to family members about missing after-work activities. Sound familiar? Financial forecasting and navigating complex investment decisions is a huge undertaking in any organization. As taxing as the process is, if these decisions are not fully aligned with your corporate roadmap, the weight of them will be felt in every aspect of business operations.
An easy way to succeed is to ensure these significant investment decisions are based on financial and operational facts, and not clouded by unanswered theoretical questions. To effectively navigate your capital spending and take better control of the balance sheet, removing uncertainty is vital. Fleet, which has more than its share of seemingly uncontrollable factors, is a microcosm of this intricate business dynamic.
What if you could show the value that fleet brings to your business by accurately forecasting the fleet’s capital needs?
Today, savvy organizations combine a thorough analysis of business and economic trends with comprehensive fleet data to accurately forecast the true cost of ownership and lead to greater certainty in capital forecasting. This methodology is vital to creating a cost effective and reliable fleet that’s a strategic asset, driving revenue back into your business.
Understand the Factors that Influence your Investment Strategy
Fleet is more than a budget line item; it’s an essential tool that contributes to the sustained success and growth of the business. To keep the fleet fueling revenue and avoid erratic capital funding requests, you need a sound financing strategy that eliminates uncertainty and aligns with the overall objectives of your organization.
Once you have determined how fleet aligns with and supports your business objectives, consider these factors as you develop your investment strategy:
- Impact on Cash Flow – Does your company want to conserve its available working capital? Be sure to consider initial acquisition costs as well as the full term of loan or lease payments.
- Potential Budget Constraints – Are lower monthly lease payments and maintaining financial flexibility more valuable to your organization’s overall fiscal outlook than the benefit of eliminating monthly payments many years later in a purchase scenario?
- Possible Alternatives – What’s the most beneficial way to allocate your available capital? How does this investment impact other short and long-term business decisions?
- Diversity of Funding Sources – Is it important for your organization to diversify financing sources to remain agile for market fluctuation? Do you want to tie up bank lines to pay for fleet vehicles or diversify by leasing?
There are many ways to finance your fleet. From leasing to financing to purchasing the vehicles outright, each strategy has a different – and potentially significant – impact on your company’s cash flow and bottom line. Taking into consideration all of your unique circumstances as well as the prevailing financial climate will ultimately clarify your capital investment strategy.
A Data-Driven Approach to Capital Forecasting
In today’s business environment, most companies have access to as much data as they are willing to collect, but the reality is that unless you can effectively harness the potential of this data, it really doesn’t provide much value. Rather than simply tracking information and reporting on what happened, you need to identify the predicative data that will empower you to get ahead of the cost curve.
Technology is transforming historical data into actionable information that highlights the true total cost of ownership for each acquisition scenario. The focus shouldn’t be on which vehicles are costing you the most but rather why are they costing you the most.
Is purchasing vehicles restricting your cash flow and negatively impacting other areas of the business? Is a particular leasing scenario inflating costs because you’re locked into unfavorable terms and cannot cycle vehicles out of service at the proper time?
By effectively leveraging Big Data, you can accurately forecast outcomes and bring clarity to the investment process, ensuring you’re basing these important business decisions on factual information supported by historical data – not hypotheticals or intuition. The ability to see your fleet’s data in real-time allows decisions makers to develop actionable plans, transforming the information from merely insightful to genuinely impactful.
Allow this analysis to guide your strategy and tailor acquisition models to the unique characteristics of your business. By removing uncertainty, you will be empowered to make the best possible decision for your organization and forecast the capital needs of your fleet with significantly greater accuracy. In turn, you create a fleet that powers revenue rather than drives costs.
Take control of your fleet financials in the face of changing economic conditions. ARI’s experts provide the insight, tools, and support to improve how you select financing options, control operating costs, and support your organizational objectives. Contact us today.
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