19 Jun 2023

Vehicle leases – not just for large companies anymore

As a small business owner, being time poor and protecting your cash flow, your working capital and your assets are some of the main challenges of running your business. Yet, many of us overlook a great way to protect each of those items – vehicle leasing.

Traditionally, many small business owners have seen vehicle leasing as being primarily for large companies and corporations who need an enormous fleet of vehicles. But in fact, vehicle leasing – particularly a fully maintained operating lease – is an excellent option for businesses with small fleets of 1-20 vehicles. And one that provides incredible benefits.

So what is a fully maintained operating lease? What are its advantages and disadvantages? And why don’t more small business owners choose leasing over buying when it comes to car ownership?

What is a fully maintained operating lease?

A fully maintained operating lease is very much like a rental agreement. Rather than putting a strain on cash flow or dealing with lengthy finance negotiations to buy a vehicle outright, a fully maintained operating lease is a stress-free solution. The lessor takes care of bundling a majority of your vehicle's running costs – including registration, servicing and tyres – into one monthly payment.

And it’s not just a flat rate you pay either. The lessor will take into consideration how many kilometres you drive and how long you plan on leasing the vehicle when calculating the monthly cost. Better yet, if you’re operating a fleet of vehicles, you get full use of the fleet without the hassle of managing ongoing paperwork, fuel receipt reconciliation, regular services, maintenance and registration: a real boon for time poor business owners. And then you can simply return the vehicle (or vehicles) at the end of the lease.

Advantages of a fully maintained operating lease

There are a huge number of advantages to a small business owner who chooses a fully maintained operating lease.

• Saves you time that you would otherwise spend on managing your vehicles and keeps your business in new cars without the hassle of upgrading via purchase
• There’s less risk on the purchase and resale value of the vehicle, plus you can access unique fleet discounts when purchasing or servicing your vehicle
• Frees up business capital that would otherwise be tied up with asset ownership
• May provide tax benefits (if the vehicle is used to generate taxable income)
• Gives you the flexibility to keep your vehicles up to date, which ensures the safety of your employees and also offers improved fuel efficiency, lower servicing costs and less chance of mechanical breakdown
• Helps you upgrade and scale as your business grows
• Creates budgeting stability each month since the cost of the car is bundled into a single, negotiated fixed price with all essential operating costs included
• Total flexibility when it comes to customising your vehicle with any accessories or fitouts required

The drawback of a fully maintained operating lease

In general, the main disadvantage of leasing a car or a fleet of cars is that you won’t own the asset outright. However, given a vehicle is a depreciating asset, many business owners aren’t phased by the concept that it always remains owned by the lessor. Unlike with a personal vehicle, it’s likely important that you keep your business car or fleet of cars up to date. This is because it represents your business – and you want to show it in the best light – and because it keeps your employees safe.

In addition, being able to budget more accurately for your outgoing costs each month is hugely beneficial. Every small business owner knows the toll it can take on your business on extra operating expenses or maintenance pops up. Finally, being able to keep your business capital for other purposes – such as technology, manufacturing or just to protect your cash flow – is a huge benefit that will allow you to both maintain and grow your business.

Why don’t more small business owners choose leasing over buying?

Many small businesses assume that leasing is only for large companies with high financing needs. Or even for businesses whose business model requires the use of a fleet of cars. And historically, this has been the case. But improvements to credit decisioning and digital capabilities means there are now companies – just like us – who are dedicated to helping small businesses reap the benefits of fully maintained operating leases.

As a small business owner you can obtain a fully maintained operating lease for a single vehicle if you wish. Or you can acquire an entire fleet in this way. No matter the size of your fleet, you can be confident that your operating lease will help support your business into the future with assets that can grow with you into the future too.

At FleetPartners, we’re experts at operating leases for your car or your entire fleet. We can help you manage the entire process and ensure that you’re getting all the benefits you need from your vehicles.