When it comes to business travel, companies have several options, which may include renting or owning a fleet of vehicles. Grey fleet, however, refers to vehicles used for business travel that are neither owned or leased by the company. In this scheme businesses use personal cars for business transport.
The cars could be privately owned or hired by employees for business travel. It also includes vehicles purchased under employee ownership schemes and cars for which owners claim fuel expenses or cash-back allowances. For businesses with low mileage, personal vehicles are beneficial because they enable cost savings. Grey fleet management is important to ensure adequate legal compliance and best practices.
Let’s break down the pros and cons of this mobility solution.
Grey Fleet Management: Best Practices
Businesses that rely on detailed management strategies see reduced costs, enhanced productivity, and a smoother process when it comes to compliance with UK regulations. Just as in standard fleet operations, fleet managers ensure that all vehicles are in proper condition for smooth business trips. Most fleet managers rely on a fleet management software to oversee all vehicle operations and increase business efficiency.
Grey Fleet Management Tasks
Besides tracking vehicle use and behaviour through GPS, dash cameras, On-Board Diagnostics (OBD), and company fuel cards, employers also have to manage driver behaviour. The capacity to drive effectively may be affected by fatigue and illness. A system that tracks driving hours, counter-checks employee health, and verifies that all vehicle documents are updated is vital. Providing guidance on driving and establishing a fleet management policy is also essential.
Fleet Management Software
With a grey fleet there is a lot of documentation to keep record of. The right kind of software or implementing fuel cards, can help fleet managers keep records of car conditions, mileage, fuel consumption, tax and insurance, driver health and safety, and vehicle maintenance schedule. With a fleet management tool you can digitalise and organise those records to make sure all is in order. Some fleet management software providers can also help your business find the right fleet management solution or discuss what options you have when managing your fleet.
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Risk Management Strategies
Part of managing a grey fleet includes understanding the risks associated with the use of personal vehicles for business travel. As a business owner, it’s crucial to consider questions such as:
- Is the driver adequately trained to drive? If not, what training is available?
- Is the driver in good health and well-rested?
- Do employees have to make journeys in their vehicles? If meetings can be held virtually, businesses can reduce company trips.
- What type of vehicles should be included in the fleet? Some cars are massive fuel guzzlers or may require maintenance more than others.
- Is there a mile limitation for personal cars used for business travel?
- What other modes of transport are available, and how do their risks compare to personal vehicles? As witnessed during the COVID-19 pandemic, businesses couldn’t always rely on public transport or carpooling to lower costs.
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Obligations of the Employer
The duty of care by an employer applies as long as the employee uses their vehicle for business travel. Employers should address questions such as:
- Does the driver/employee have the right driving skills?
- Is the car’s insurance up to date?
- Is the driver’s licence valid?
- Is the car well maintained for business travel?
The driver’s ability to operate the vehicle safely is essential for businesses for several reasons. First, a good driver optimises fuel consumption and keeps the vehicle in excellent condition. Second, skilled drivers prevent road accidents, which may cause injuries to employees and other road users.
Without accidents, your business can avoid hefty hospital bills, lawsuits, and lengthy investigations. You can also avoid losing your reputation, business opportunities, and clients due to car accidents. Lastly, you can also avoid writing off vehicles and prevent employees from being banned from driving.
Grey fleets are subject to vehicle laws in the United Kingdom, just like any other type of fleet schema. The private cars employees are driving should be appropriately maintained, be roadworthy, have valid insurance, and all drivers should have a valid licence. Part of managing grey fleets is to ensure the relevant compliance measures are adhered to.
What Are The Benefits Of Grey Fleet Management?
- For businesses with low mileage, the use of personal vehicles saves costs spent on hiring or owning company vehicles.
- Companies can avoid hefty taxes imposed on company-owned cars.
- Businesses can ensure employee mobility even without funds for large fleets.
What Are The Challenges Of Grey Fleet Management?
- Managing large fleets of personal cars is challenging and also costly for a large business.
- Reimbursing drivers for costs spent maintaining vehicles or on fuel is challenging without accurate records. Reclaiming the costs may be open to abuse and error by employees who may use the opportunity to cover other travels.
- It’s challenging to find a fair estimate to compensate drivers for the amounts spent on their vehicles. Most employees own different vehicles that vary in fuel consumption and maintenance costs. For standardisation, carpooling and company cars may be more efficient.
- There is a substantial financial risk associated with collisions. If an employee gets into an accident during a business trip and is found guilty of having no insurance or using an expired licence, the costs of the accident may pass to the employer. If the accident is severe, there is a possibility of investigators shifting their focus to the employer/business that had the responsibility of managing the driver and the vehicle.
- There is a loss of productivity when an employee is stuck in traffic, involved in an accident, and cannot work.
How To Reduce Grey Fleet Costs
Encourage Active Travel
For short trips to the nearby centre, especially if parking is challenging to find, ask the employees to walk or ride bicycles. If you have electric bikes in the area, encourage workers to use them instead of the grey fleet. If an employee needs to make a trip, they can use an app to check the distance and walking time before choosing a car.
Car Sharing in Grey Fleets
While you cannot ask workers to live in the same neighbourhood to share vehicles, you can regulate some of their business trips. Ask employees to share cars, especially when going on business trips together.
Public transport is an excellent alternative to grey fleet, especially when it’s available. First, do your research to find out when buses and trains are available, especially for long-distance trips. You can develop partnerships with local bus and train companies to reserve employee tickets and seats in advance.
Running a Car Scheme
Offering a car scheme where employees sacrifice part of their pre-tax salary in exchange for a car helps you manage the vehicles’ cost. You can regulate the types of vehicles allowed in the scheme by managing emissions, fuel usage and insurance. In this way, you can control some costs of your fleet indirectly.
Grey Fleets & Fleet Management Software
Fleet management software helps you monitor vehicle condition, location and distance travelled, fuel costs, car maintenance costs, insurance and driver condition. Fleet Geo by Vimcar is an excellent solution for any business owner seeking a solution for managing their grey fleet.