Small business finance

For many small businesses in trades such as construction or plumbing, having access to a van is crucial to the success of their business. These business owners represent a huge market but all too often they are dismissed as small fry by financiers. This is an opportunity for your dealership to take advantage of: if you can prioritise these customers and provide them with finance that suits them, you’ll give the economy – and your business – an important boost.

The rise of the subscription economy, where businesses and their customers pay only for what they use, has reduced the importance of ownership in favour of access. There are plenty of successful examples to consider: Netflix, Airbnb, even your mobile phone contract. People are no longer interested in owning all the products and services they need – leasing is often a far more convenient and affordable solution.

What finance is best?

Small business owners have limited spending capacity, and are unlikely to have saved enough to buy a van outright – perhaps not even enough to cover the VAT. Our OptiVan Lease allows them to afford a van with a low upfront cost – and, unlike with hire purchase, they can spread the VAT across the length of the contract. That’s a great incentive for businesses that aren’t VAT registered – only 14% of sole proprietorships were registered for VAT or PAYE in 2016.

Customers can also choose to add a balloon payment. This will reduce their monthly repayments even more and enable them to afford a higher spec vehicle that will better serve their business. At the end of the lease contract, your customer will have a few options to consider. They can continue to use the vehicle and pay nominal secondary rentals. Or, they can sell it at market value and receive part of the sale proceeds.

OptiVan Lease is also better for your business. By providing small businesses with finance that doesn’t cost them a fortune, yet allows them to afford the vehicles their business depends on, you will forge strong customer relationships and attract new business within the sector. At the end of the lease the customer will likely go back to their dealer to discuss the end of term options, enabling you to potentially arrange a lease for a new van, and retain their business.

1. 1. MotorwayBuddy >

This commercial vehicle app is designed to help truck drivers, haulage companies and truck stops operate more safely and efficiently. The fleet version enables real-time incident reporting straight from the driver’s mobile, alongside checklists that automatically upload to help audit compliance. Drivers can use the app to find places to stop overnight, and the app also simplifies driver expenses by enabling digital transactions for truck stops, truck washes and weighbridges.

2. 2. FleetSafer >

FleetSafer automatically detects driving status and engages Safe Mode when driving movement is detected, bringing up a curtain screen and silencing all incoming calls, messages and notifications. Full functionality is restored when the vehicle is stationary.
This commercial vehicle app helps encourage good driving practice and ensures compliance with safe driving policies.

3. 3. Truckstop UK >

Truckstop is a commercial vehicle app that provides details on over 200 truck stops, listing thousands of parking spaces as well as the amenities available at each stop. Truck stops are important rest areas for drivers, and regular breaks are essential for road safety. Truckstop uses GPS to help drivers and freight transport operators plan their journeys and rest and park safely.

4. 4. Trucker Timer >

TruckerTimer is designed for truck, lorry and HGV drivers in the UK and Europe to help them track their driving hours and let them know if they’re at risk of fatigue violations. This helps drivers stay legal and abide by the complicated EU driver’s hours regulations.

5. 5. Truck Buddy >

Truck Buddy lets drivers connect with other drivers on the road all around the country. Features include a driver timer, a chat function that lets drivers communicate with each other, traffic alerts, trucking news and information on food and fuel stops.

6. 6. Voice Text Pro >

The app converts speech into text and directly sends messages to e-mail, SMS, Twitter or Facebook. Users can also send the text to their clipboard and paste it into any other application. This is ideal for CV drivers who spend long hours on the road, helping them to stay safe and avoid texting while driving.

7. 7. Daily Defects >

Daily Defects is a commercial vehicle app for UK truck, coach, lorry, HGV or other heavy vehicle drivers. The app enables them to keep a record of their daily vehicle inspections, as required by the Driver and Vehicle Standards Agency (DVSA).

Drivers can easily record the results of each inspection point check, and if anything is defective they can make a note and include a photograph if needed. Defect reports can be exported as printable PDFs for easy sharing with transport managers, or just to provide a record for the driver’s own benefit. Checklists can match up with DVSA or specific agency requirements.

Of course, although commercial vehicle apps can help improve safety, compliance and efficiency, they are no substitute for investing in up to date, compliant commercial vehicles.

1. What’s more important to your customer: access or ownership?

Before offering your customers the right deal, you have to establish their priorities. You need to know what their business needs are and what finance is best suited to meet them.

If vehicle ownership is your customer’s preferred option, then discuss the benefits of hire purchase with them. This form of finance for vans allows your customer to pay for the asset in question over a pre-defined period of time. Deposit, repayments and repayment frequency are flexible. Your customers are also protected from any increase in interest rates because all terms are agreed upon upfront.

Or, your customers may want to avoid the hassle of ownership and have the option of upgrading their vehicle in three to four years. In this instance, it’s best to consider a finance lease. This option gives your customers access to the latest equipment for a low upfront cost as, unlike with hire purchase, the VAT can be spread across the length of the contract.

2. How much use will the vehicle get?

This will play an important role in determining the best deal for your customer. Businesses whose mileage is likely to be under a certain threshold at the end of the contract term will benefit from a finance lease. The customer will have several options at the end of the contract, including putting the residual value towards a new van.

For businesses such as couriers that will be racking up a lot of miles, hire purchase is recommended as there is no cap on the vehicle’s mileage.

3. What is your customer’s budget?

At the end of the day, budget considerations are critical – especially for small businesses with limited capital. Before making any decision, your customer will want to know exactly what their monthly repayments are – and the total cost of the contract. As a balloon payment further reduces monthly repayments, the customer could be able to afford a higher spec vehicle that will better serve their business. At the end of the lease your customer can either continue using the vehicle by paying nominal annual rentals, or sell it at a profit and receive part of the sale proceeds.

The right finance can overcome cost objections and help you build better, longer lasting relationships with customers who will return to you at the end of the contract, unlike with an upfront purchase. In turn, you can make sure they can afford the best possible van for their budget.

Safety AI

Netradyne, a technology company based in San Diego, has designed an AI system that can identify cars, pedestrians, and other critical environmental factors such as traffic lights using 360º video footage. Mounted behind the rear view mirror, it notices potentially hazardous actions such as speeding and tailgating, notifying drivers and fleet managers of any relevant incidents in almost real-time.

The central idea is to boost driver and pedestrian safety, but it can also be used to gauge performance. Employed as a cloud-based system, Netradyne’s tool can analyse up to five days of driver footage, ranking drivers using a credit-score style system. It will therefore make it much easier to identify areas of underperformance and work on making the necessary improvements.

High-speed mobile charging systems

While petrol and diesel-fuelled commercial vehicles remain dominant, companies are working to incorporate alternative sources of energy into their fleets. However although electric vans and trucks are a potential gamechanger for the industry, there remains the question of how to charge them quickly and cost-effectively.

Enter Zapinamo, a charging technology company, which has secured £2.2 million of government funding to develop mobile, rapid charging technology for electric commercial vehicles. The trials will be supported by IVECO, Farmdrop and WMG at the University of Warwick. Using on and off grid sources, it’s able to deliver 400k/w to charge a vehicle in minutes. Though it’s not yet market ready, it has huge potential, and promises to make electric commercial vehicles financially viable as well as environmentally-friendly.

Self-driving vehicle

You can’t mention commercial vehicle technology without mentioning the self-driving vehicle. Among other developments in this sector, tech company Nvidia and automotive supplier ZF have collaborated to launch a new self-driving commercial vehicle system – one which confers a degree of autonomy on machines involved in agriculture and factory work.

The ZFPro AI system will effectively remove the possibility of user error – allowing fleet managers to benefit from significant efficiency gains.

The zero emission van

Carbon emissions are a significant issue for anyone involved in the commercial vehicle sector, and technology will go some way towards alleviating – or eliminating – the issue. The Department for Transport, Innovate UK, Haydale Composite Solutions and Arcola energy are working on doing exactly that: they’re partnering on the creation of a zero-emission drivetrain that will be incorporated into a 3.5 ton van. Powered by hydrogen fuel cells, the vehicle will have a range of 200 miles per day and will be fully usable in urban environments.

Of course, these are only a few of the many innovations coming to the sector in 2017 and beyond. Whatever the future holds for commercial vehicle technology, it’s likely to be bright.

Accident avoidance

Whether businesses are using new commercial vehicles or older models, accidents happen. But when they do, they can potentially cause injury, loss of profits and loss of efficiency – amongst other things. It’s in the interest of every business to mitigate the number of incidents that occur within their fleet.

Fortunately, technology has advanced to the point where many new commercial vehicles come with sophisticated collision detection tools. For example, the Volkswagen Caddy has built-in autonomous emergency braking, which can identify a potential source of impact, warn the driver away from it, and – as a last resort – brake on the driver’s behalf. Other vehicles come with blind spot indicators that perform a similar function.

Battery powered vans

In theory, battery powered vans offer an environmentally-friendly alternative to traditional petrol and diesel engines. Manufacturers such as Volkswagen are experimenting with introducing this kind of power to their new commercial vehicles, launching their first battery powered van this year.

However, in practice, we may be some way away from seeing battery-powered fleets. These are ultimately businesses, after all, and until the right balance between cost, environmental obligations, and efficiency is struck, petrol and diesel engines will remain the status quo.

That said, don’t count against companies like Google and Tesla – which innovate across a number of areas – investigating this potentially lucrative corner of the market and seizing it for themselves. If manufacturers won’t take advantage of this opportunity, technology companies will be more than obliging. 

Telematics

Digitisation and connectivity have the potential to redefine the industry. Telematics solutions employ big data and predictive analytics to facilitate superior fleet management – while lowering costs and boosting overall efficiency. Not only do they know the precise location of each vehicle, they know how the driver is operating it. This allows them to identify areas of persistent weakness, slash journey times, and boost profits.

What’s more, it’s already happening: across Europe, Nissan – in partnership with Verizon –  is introducing telematics solutions into its new commercial vehicles, allowing end-users to track and improve their vehicle performance in real-time.

Self-driving

It wasn’t that long ago that the self-driving car seemed like the stuff of science fiction. Though it’s not quite here yet, it could be in the near future as the UK government intends to see self-driving vehicles on the streets by 2020. When they do arrive, it may have huge implications for the industry.

At Wired 2016, plans for a lightweight, autonomous van were unveiled by Change, the automotive technology firm. Using in-house software that can be uploaded to these vehicles “at the touch of a button”, it can reportedly be made available to commercial fleets the moment self-driving car legislation is approved. The implications of this for the industry are considerable, especially in a time where there’s a shortfall of 60,000 drivers: autonomous vehicles never fall ill, change jobs, or get distracted.

Investing in assets for the present and future is always worth it. By providing flexible finance options to your customers, you offer them the chance to secure game-changing technology at their convenience – without causing undue damage to their budgets.

Interested in finding out how your dealership can capitalise on new opportunities in the commercial vehicle sector? Contact us today to discuss your objectives and find out how BNP Paribas Leasing Solutions can help grow both you and your customers’ businesses.

We reflect on some of the key challenges and commercial vehicle trends in 2016, as well as the outlook for 2017:

Driver shortage

A shortage of 45,000 to 50,000 skilled drivers drove up labour prices in 2016 and contributed to the diminishing number of owner-operators. There are an estimated 473,000 commercial vehicles in the UK and 163,000 coaches. However, the UK’s current qualified workforce of commercial vehicle drivers is only 664,000 strong. Given important factors such as a growing economy, annual leave, peak delivery periods and shift patterns, there is an estimated shortfall of 60,000 drivers. An ageing workforce means one in four drivers are also set to retire over the next ten years.

The Freight Transport Association (FTA) is lobbying to improve drivers’ wages and inadequate roadside facilities to help promote the road transport industry as a career choice for the next generation. The UK economy relies on its road networks and logistics and it’s vital that enough drivers are recruited in 2017 to fulfil the industry’s needs.

Too few women

In the 2014-15 period, the highest recorded number of women passed the heavy goods vehicle (HGV) driving test. However, it’s still comparably low and men continue to dominate the new entrant workforce, accounting for 92.6 percent of all tests passed in 2014/15 compared to only 7.4 percent for women. As 2016 comes to a close, only 1 percent of truck drivers in the UK are female. Considering the skills shortage, women are therefore a huge untapped demographic and more needs to be done next year to encourage more women to join the industry.

Fuel price

At the start of 2016, petrol prices fell to as low as 100p a litre, as oil flooded the market after international sanctions on Iran were lifted. At the time of writing petrol prices in the UK are set to increase again by up to 9p a litre as Saudi cartel OPEC agreed to a production cut. Some good news remains for 2017 though as fuel duty was frozen for the seventh consecutive year in the latest Autumn Statement, saving the average van driver £350/year.

VW emissions scandal

The diesel emissions scandal took a toll on Volkswagen. The manufacturer’s UK sales in January were down 14 percent compared to the previous year. This was a concerning decline for the carmaker as the number of new vehicle registrations in the UK grew to its highest in 11 years – a 2.9 percent increase from 2015.

Considering the uncertainty of the current economic climate post-Brexit, confidence in the commercial vehicle market is a good sign. Customers are taking advantage of flexible finance solutions through their dealers, helping to boost new and used vehicle sales. 2017 looks to be even more profitable for businesses; more finance options are now easily accessible and sales and registrations continue to rise.

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Reducing risk on the road

Imagine a fleet of interconnected self-driving vehicles that can sense, evaluate and act – automatically or at your command. With vehicles reliably able to drive themselves, we’re talking about a potentially accident-free fleet. Not only would this mean safer roads, it would also drastically reduce the cost of risk associated with fleet management.

This isn’t as far-fetched as you might think. The UK Government has pledged that autonomous and electric cars will be the focus of new legislation that aims to get people buying driverless cars by 2020. Testing of driverless cars is said to begin in the UK as early as next year.

Keep your fleet moving

Driverless vehicles won’t need to eat, sleep or take rest-breaks. Productivity gains can be further maximised with sensor technology that can monitor vehicle health, such as tyre wear and tear. On the road adjustments can also be made as real-time information on traffic congestion, safety alerts, and road and weather conditions is fed into the system and continuously updated. Navigating long-haul journeys will be made easy and risk-free, with destinations reached faster and safely.

Tracking fuel and mileage

An ongoing challenge for fleet managers is budget control. Poor vehicle maintenance, fuel consumption and driver behaviour can, and do, increase costs unnecessarily.

With the IoT, each vehicle will be fitted out with a fuel management dashboard that connects to the fleet network and gathers data while driving. Able to track issues such as excess speeding, idle time and maintenance needs, managers will have a bird’s eye view on how well their fleet, as well as individual vehicles, are operating. Any poor practices will be flagged and can then be addressed to help break bad driving habits, improve routine maintenance and maximise fuel efficiency.

The interoperability of IoT devices will also allow for smartphones or apps to be installed in vehicles to track mileage from journey start to finish. Fleet managers will have instant access to downloadable and transparent information ready for their files – and the HMRC.

Managing maintenance

The whole is only as good as the sum of its parts. Or more to the point, a fleet business runs only as well as its vehicles. Keeping the machines in top-notch running order is a manager’s number one priority, and scheduling headache. An IoT-based fleet management system using mobile scanners, hidden sensors and RFID systems, can rank maintenance needs per vehicle, and according to what needs the most urgent attention. This way, vehicles in good working nick won’t be taken off the road unnecessarily, breakdowns will be pre-empted and overall downtime minimised.

Challenges and opportunities

While the risk reduction benefits of the IoT for the CV sector are numerous, and hugely attractive from a cost and time saving perspective, there are some concerns around take-up.   Successful interoperability of IoT devices is vital to enjoy all the advantages of working within an intelligent, integrated network. Additionally, the roll-out of driverless vehicles will result in industry job losses, a short-term challenge as these roles are reabsorbed elsewhere. With many CV fleets already getting on board, there is no doubt that the impact of the IoT in this sector outweighs the concerns, and is no longer the stuff of science fiction. 

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