Corporate finance departments and fleet managers bring different perspectives to priorities such as vehicle acquisition, cost reduction measures, and maintenance and repair that can create obstacles such as "a significant lack of communication," according to a new survey from Fleet Advantage.
About a third of fleet executives (37.5%) said their finance departments don't clearly communicate the company's financial metrics and goals to fleet operations personnel. Another third (34.4%) said finance doesn't understand the benefits of investing in new equipment. And 31.3% said finance doesn't understand the various operating costs associated with the fleet.
"It is evident that both the operations and finance departments are focused on different priorities in terms of fleet management and costs, and this poses a challenge to collectively achieve a singular organizational goal," said Brian Holland, Fleet Advantage's president and chief financial officer. "Hopefully, this survey will shed light on these communications challenges so that both departments can work closer on a fleet that operates more smoothly, with lower costs."
Fleet Advantage provides fleet services such as truck fleet analytics, equipment financing, and lifecycle cost management. The company's survey also delved into cost control perspectives and driver turnover.
The fleet executives said the finance department is concerned primarily about cost reduction (53.1%) followed by improving cash flow (40.6%). A quarter of fleet executives also said finance officers are unclear about how proper fleet acquisition strategies and lease-versus-purchase decisions affect the company's bottom line.
A majority of fleet executives (62.5%) said they focus on maintenance and repair costs when calculating a fleet's return on investment and three-fourths said they present this data to finance to gain access to capital expenditure for new equipment. A "stronger focus on TCO metrics" by finance would improve cost reduction initiatives and significantly improve cash flow in truck fleets. ABout 18.8% of finance professionals don't inquire about these metrics, according to Fleet Advantage.
The survey also looked more closely at driver turnover. About a fifth (18.8%) of the fleet executives said finance doesn't understand how newer trucks can reduce driver turnover and improve retention. Among heavy-duty truck fleets, this can be a critical issue due to a shortage of qualified drivers. The annual turnover rate at large truckload carriers with more than $30 million in annual revenue increased six points to 94%, according to the ATA's Trucking Activity Report. The turnover rate for smaller carriers fell to 73%, which was still seven points higher than the prior year.
Fleet Advantage has created an infographic to show the survey's results.