Fleet Advantage, Fort Lauderdale, Fla., announced its latest industry survey, which reveals a significant lack of communication between fleet operations and finance departments within many organizations.
The online survey shows private fleet management personnel highlighting several obstacles when trying to communicate fleet operational needs with finance departments. Signifying this lack of communication, 37.5% of fleet executives cited the inability of their finance departments to clearly communicate the company’s financial metrics and goals to the operations department as the largest communications struggle. An additional 34.4% said finance doesn't understand the benefit of investing in newer equipment, while 31.3% said finance doesn't understand various operating costs associated with the fleet.
When asked which part of the company's financial performance the finance department is concerned about the most, 53.1% said cost reduction and 40.6% said improving cash flow. Finance officers are unclear about the role proper fleet acquisition strategies and lease vs. purchase decisions play on a company's bottom line, which is why only 25% of operations management believe this area is a concern for finance departments.
However, a closer look shows where a large disconnect is present between the two departments. Finance departments are most concerned with cost reduction (53.1%) and improving cash flow (40.6%). However, the majority of fleet executives (62.5%) said they focus on maintenance and repair (M&R) costs when calculating their fleet’s return on investment and 75% said that they present M&R data to finance to gain access to Cap Ex for new equipment. With M&R representing the largest, most volatile of operational costs in a truck fleet, a stronger focus by finance on TCO metrics would help improve cost reduction and cash flow for the bottom line. Unfortunately, approximately 18.8% of finance professionals never inquire about these metrics.
Furthermore, 18.8% said finance doesn't understand how newer trucks can reduce driver turnover and improve retention. This item is critical, particularly as driver shortage and turnover rates continue to grow.
“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,” says Brian Holland, president and CFO. “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.”