Fleet managers and consulting professionals alike are constantly on the hunt for the drivers behind fleet management asset optimization. The best way to positively influence investors, managers and owners as a means to capital access? Creative storytelling.
Fleet managers and consulting professionals alike are constantly on the hunt for the drivers behind fleet management asset optimization, which can include equipment acquisition, regulatory compliance, risk and safety, maintenance management, fuel efficiency maximization, and asset tracking, to name just a few.
A truck’s life-cycle operating costs represent a whopping 79% of its total asset cost, with financing costs comprising the remaining 21%. If you consider that per unit costs range from $75K-$125K, a 250-unit fleet has an asset investment/capital expense/value/price tag of $31.5 million — a hefty price for private fleets and carriers alike. And depending on fleet size, these costs may become exponential.
But what about the less sexy 21% finance piece? It’s important because you still have to acquire the trucks, be it by straight purchase or with some form of equipment lease and/or loan financing.
Many of the fleet management optimization drivers significantly influence optimal asset acquisition/disposition timing and economics.
If a fleet manager cycles out 1/5 of a fleet annually, someone needs to cut a check, or strategically finance $6.25 million. Depending on a company’s cash position, this might be a good time to evaluate lease/financing vs. buy options.
If your company wants to be the owner of the equipment or simply a lessee (to eliminate ownership risk), it needs to determine how and where to secure the most competitive finance alternatives to suit asset management operating methodology. Obtaining the most favorable credit/finance terms can be significantly influenced by an often underappreciated aspect of running a business organization — the creation, maintenance and communication of meaningful, illustrative financial and managerial reporting.
A strategic business storytelling approach presents a clear, progressive narrative that can be understood by prospective creditors/investors, and more importantly, by your company’s owners and managers.
A financial information presentation that works best for internal strategic managerial performance evaluation and pursing external capital access/credit includes:
But numbers alone will only get you so far. It is in management’s best interest to complement its financial reporting with a brief business driver narrative to explain and qualify meaningful variations reported in the financial statements.
This approach demonstrates management’s variance awareness; its ability to address cause, solution and anticipated trends going forward; and promotes accountability across the organization.
A strategic process and adherence to pro-active communications gives business owners and lenders a quantitative and qualitative business story to help evaluate current company performance and financial condition, trend history and future business prospects.
The road to capital access and credit availability can be a rocky one. Lay the groundwork and pave the way to greater capital access opportunities by developing and implementing a financial presentation strategy that clearly communicates your business story. And back-up the money truck.
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