Many companies are being massively overcharged for vehicle hire because they fail to pro-actively manage costs, do not question invoiced charges and have not analysed their rental fleet profile.
Advocating “intervention management”, Tony Donnelly, chief executive of Goodwood Corporate Mobility, parent company of Goodwood Rental, calculates the business can save fleets up to 25% of their historic rental expenditure.
He said: “Horror stories around holidaymaker car hire ‘rip-offs’ are commonplace, but exactly the same practices face unwary fleets in their daily use of vehicle rental.”
That’s why Goodwood Rental implements a process of “intervention management”, which is underpinned by a robust service level agreement and key performance indicator structure designed to eliminate ‘rip-off’ charges that might include, for example:
- Blatant and unnecessary charges for damage that may not have occurred to a vehicle while in possession of a fleet customer
- Above pump price fuel charges when a driver omits to refuel a rental vehicle on return
- Airport surcharges even when a rental company has an airport facility
- Out-of-hours charges that penalise a business’s employees who work from home.
“Intervention management is critical at the outset of any rental supplier relationship, particularly as too many fleets say they do not have the resources to carry out charge checks so they simply pay up and do not even bother to undertake any invoice validation,” said Mr Donnelly. “Rental providers are aware that there is generally a lack of invoice checking for perceived overcharging in the corporate sector as are contract hire and leasing companies that provide a ‘bolt-on’ vehicle hire service to customers.
“As there is frequently no filtering of cost by end-users, daily rental thus becomes a major revenue generator for providers. What’s more, in many instances rental branch managers are remunerated according to profit and loss performance within their outlets. Therefore, if they perceive that there is an opportunity to add costs to corporate invoices they may take it.”
Mr Donnelly continued: “Unfortunately vehicle rental overcharging is one of the many issues that has arisen as a consequence of businesses axing the job of fleet manager. Professional, full-time fleet operators have the knowledge and experience to comb through invoices and spot unwarranted charges and take the issue up with their providers.
“Today, more junior members of staff with limited fleet knowledge, but nominally in charge of a fleet, are unlikely to have the experience to take suppliers to task. What’s more invoices may simply be routinely paid by a company’s finance department without question and recharge costs can continue to grow resulting in invoice creep.”
Suggesting that most businesses simply “pay the rental tariff charge based on a per day rate”, Mr Donnelly says that prior to sourcing vehicles on daily rental, companies must compile a rental profile based on current and historic usage.
He said: “That rental profile should then be used to negotiate the best rental rate per vehicle. A rental company’s published hire tariff should merely be a discussion starting point. Goodwood Rental ensures that it understands clients’ operational demands.”
Furthermore, Mr Donnelly said: “For fleet decision-makers the work really starts when the invoice arrives. We see numerous examples of companies being overcharged, but through intervention management Goodwood Rental typically delivers savings of up to 25% versus an organisation’s previous rental expenditure.”
He concluded: “A good starting point when analysing rental costs is to ensure that charges are unbundled from any other expenditure and are identifiable on an individual basis. Secondly, businesses should examine their rental profile and calculate average number of hire days and price: If costs are not measured they cannot be monitored.
“What’s more as the concept of mobility-as-a-service becomes an increasing reality in the fleet sector and vehicle rental is included within that solution for most progressive businesses, meticulous management of hire costs is essential.
“Post-hire invoice validation is administratively unnecessary and time consuming. That’s why Goodwood Rental advocates intervention management during the pre-contract process to ensure any ‘rip-off’ tactics are eliminated leaving our clients to focus on their core business activity.”