Strong Tie Insurance August 3, 2020 StrongtieInsurance Contents hide 1 Things to Consider Before Expanding Your Fleet 1.1 Your Finances 1.1.1 Lease vs. Buy 1.1.2 When Having More Costs Less 1.1.3 Cash Flow 1.2 Your Goals 1.3 California Fleet Auto Insurance Options 1.4 Get the Right California Fleet Auto Insurance for Your Needs Whether you are running an extensive collection of commercial vehicles or you’re merely thinking about crossing into managing a full-on fleet, there are various items to consider to ensure you’re doing it right. From updating your auto insurance to the logistics of managing multiple vehicles, you don’t want to jump into your decision lightly. Moreover, owning more trucks can provide more opportunities, but it also increases your responsibilities. Things to Consider Before Expanding Your Fleet Your Finances One of the first elements you should consider when starting or expanding a fleet is your financial situation. Running another truck comes with increased costs, such as fuel, drivers, fleet insurance, and more. Some of these costs are going to come into play before you can utilize your additional equipment to make more money. Lease vs. Buy Adding a new vehicle or two means deciding if you are going to lease or buy. Keep in mind that both have their ups and downs, so it’s working looking at both options closely. Leasing has undoubtedly become a more popular option in recent years. The payments can act as write-offs on your taxes, you might be able to negotiate routine maintenance, and you can count on having more modern vehicles. The downside, of course, is that you’ll always have a payment. Most lenders also require that you carry more comprehensive and thus more expensive auto insurance. You’ll also never build equity in your truck. Buying is also worth consideration because brand new trucks are in tip-top shape and come with all of the best conveniences available. A quality used pickup can save a ton of money while still providing a reliable ride. You do need to take into account a used vehicle’s maintenance history. Purchasing a truck outright means you’ll eventually own the vehicle and won’t need to make additional payments. The equity earned in this kind of purchase can come in handy down the road. When Having More Costs Less Some companies believe that the best discounts are only available to those who have a large fleet of vehicles. This can certainly be the case for things like fuel, tires, and fleet insurance. Shop around and see what adding to your fleet might do for your bottom line. At the same time, smaller trucking companies can often get access to significant discounts by joining a trucking aggregate or collective. See what makes the most sense for you. Cash Flow It may take a while for the money you put down into expanding your fleet to see a return. It’s not uncommon for trucking clients to take up to 90 days to pay an invoice. So, even if you can get additional work right away, you need enough operating money to keep things moving until checks arrive. One option to help with this issue is called factoring — this is the process of selling an invoice to another company that will pay a percentage of the bill until the invoice is paid in full. Factoring companies often do credit checks on potential clients to make sure they pay their debts. Of course, working with a factoring company means losing some of the overall profit, but it can help keep cash flowing. Your Goals It’s crucial that you examine your intention and reasoning behind adding additional vehicles to your collection. Make sure to consider your goals not just in the short-term but in the long-term as well. The decision to add to your fleet and what kind of vehicles to purchase should align with your one, five, and even ten-year goals. Otherwise, you might buy something that seems like a good idea today but won’t benefit you a few years from now. Part of examining your goals is looking at the logistics required to make those dreams come true. For example, if you already have an extensive fleet, adding one more truck to the mix might not seem like a big deal. You’ll have to account for getting this truck into a maintenance rotation, as well as decide who will actually drive it. This might mean needing to recruit, hire, and train a new driver. The time and costs associated with bringing a new driver on board can certainly add up over time. A larger fleet may also require more staff in your office to handle issues that may arrive, scheduling routes, and assigning jobs. Small companies can often get away with an administrator who can handle everything from payroll to dispatch, but a more extensive fleet may require adding people to the team. California Fleet Auto Insurance Options Every state requires at least commercial liability insurance on every truck in operation — this means having an individual policy for each of your vehicles while your company is small. When there are only a few trucks in commission, it’s not difficult to manage these insurance policies. However, once you start adding vehicles to the mix, things can get more complicated. In California, a company qualifies for fleet insurance when it Has 15 vehicles in its name, or Purchased five vehicles in a single year. Fleet insurance simplifies things by putting every vehicle on a single policy. Of course, you still have all of the options you’d get with individual policies, but it’s much easier to manage. Additionally, there are a number of factors that could impact your fleet insurance like the type of vehicle, it’s size, how old it is, and more when you add another vehicle to your fleet. If you’re expanding the type of cargo you can haul, you may need to consider looking into additional policies to ensure that you’re fully protected. An example would be adding a refrigerated truck into your fleet. Read also: Emerging Trends Affecting Fleet Management Get the Right California Fleet Auto Insurance for Your Needs The best way to ensure that your California fleet auto insurance meets your needs without hurting your wallet is to shop around. The best fleet insurance companies can help you understand the repercussions of adding vehicles to your fleet as well as helping you explore all of your options. You owe it to yourself to get all of the information so you can make the best decision. Before you take the leap into expanding your fleet, call Strong Tie Insurance to explore and learn about all of your fleet insurance needs and get a free quote. 3 Considerations Before Expanding Your Fleet was last modified: April 28th, 2021 by Strong Tie Insurance Related posts:Workers Comp Laws and Requirements Employers Should KnowMoney Saving Tips for Your Semi Truck InsuranceWhat Are the Requirements for Interstate Commercial Truck Insurance?