Creating a fleet budget doesn’t have to be a daunting task. In this post, I’ll guide you through four key steps to streamline your annual budgeting process.
Whether you manage a small- or medium-sized fleet, these tips will help you optimise costs and improve efficiency. Plus, you’ll find a link to a free fleet budget template that you can download and use right away.
Fleet budget to-do list: 4 key steps
1. Map out your goals
What do you want your business to achieve this year? Many of the small- and medium-sized fleets that Webfleet advises want to keep costs down. If you’re also concerned about costs, saving on fuel and maintenance is probably a priority—after all, these are typically two of the biggest operational expenses for fleets.
Some fleets seek our guidance on decarbonisation. Reducing carbon emissions requires some financial planning, especially when you take electric vehicles and charging infrastructure into account.
So maybe you’d also like to trim your operational costs across the board over the coming year, and then apply those savings towards your electrification transition. Whatever your financial aims may be, your budget is the starting point. Getting clear about your goals will help give shape to your budget.
For your peace of mind, I’d like to offer a word of advice. It’s common to miss the budgetary goal posts from time to time. You can do your best to foresee certain circumstances, but the unpredictable is bound to happen at one point or another.
Maybe you needed to hire extra drivers at the last minute for an unusually busy holiday season. Or perhaps you had to replace a badly damaged vehicle. Adjust what you can to cover some of the loss in the shorter term, keeping any learnings in mind for the next budgeting cycle. At that time, you might consider building in a certain percentage towards emergency spends that you can’t really plan for.
2. Reflect on last year’s spending
Now that you’re clear on your budgetary goals, it’s time to contemplate some numbers. But how do you know which totals to use—what would be realistic? Rather than starting from a blank slate, look at your spending from last year.
If you want to trim costs, last year’s totals should give you a good sense of how to go about that. Take fuel consumption, for example. An unusually high total for fuel costs would require a bit of investigation before landing on a budget number. Was there a spike in prices at the fuel pump? You could also look into your route planning and mileage logs for clues on improving fuel efficiency over this next year.
Remember to connect the dots. Tyre health and vehicle condition play a role in fuel consumption too. About 20% of commercial tyres on the road are sorely underinflated. When tyres are underinflated by 20%, a vehicle is likely to consume 2.5% more fuel. Slow leaks also cause 90% of tyre-related breakdowns, which come with potentially costly safety risks.
Did you do everything you could to ensure your tyres were properly inflated and your engines running smoothly? It just might be that investing more of your budget in some areas can end up saving you money over the year.
3. Forecast the year ahead
At this stage, you’ll want to decide on a budgeting approach. There are two well-known budget methods, incremental budgeting and zero-based budgeting. Incremental budgeting is relatively quick and easy. You simply add a set percentage on your prior year’s costs.
Let’s stick with the fuel consumption example we’ve been using for this post. You might add 2% more to your budget to cover an increase in fuel prices. But you may also want to ask whether the prior year’s fuel costs made sense. Could it have been possible to cut unnecessary trips or keep tyres at optimal inflation levels? With incremental budgeting, there’s no process for addressing inefficiencies.
Then there’s zero-based budgeting. It’s a much more thorough approach than incremental budgeting. You can examine how the prior year’s budget was used, identifying wherever improvement is called for. The downside? There’s no way to account for unpredictable needs.
It can be hard to know which approach to choose. My take on it? Go for flexibility. No budget is ever going to be perfect. The point in creating a budget is to keep on track as much as possible towards your financial goals.
Small- and medium-sized fleets can benefit from carving out a middle path between these two approaches. If you favour incremental budgeting because it’s easier, choose that one and then develop a process to analyse the prior year’s costs so your percentage increases reflect any cost savings you’d like to make in the year ahead.
4. Input all your essential costs
Once you’ve figured out your budgeting method, it’s time to get your line items down. Since you’re reading this guide, I can only assume that you’re interested in keeping your budget as simple as possible. Many small- and medium-sized fleets like to focus on the most essential line items:
- Fuel
- Maintenance and service
- Repairs
- Training
- Vehicle replacement
Looking for a free and simple fleet budget template to track your costs in the year ahead? Download the Fleet Budget Planner 2025 from Webfleet (it’s a user-friendly Excel sheet).
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The role of data in setting fleet budgeting goals
Creating and maintaining a simple fleet budget is much easier when you have the right tools and insights at your disposal. Plus, working from spreadsheets can make it harder to adapt to changing circumstances, since you can’t draw quick insights from your fleet data.
Digital tools can make all the difference in your fleet’s ability to meet its operational goals. With a solution like Webfleet, you can stay on top of fuel consumption and maintenance needs fro a single dashboard. And with access to your data historically and in real time, you can make better-informed decisions about some of your operational costs.
Data comes in handy, too, when you have more advanced budgeting needs. Budgeting for a decarbonisation strategy can be tough to do on paper, since the cost variables can be complex. Could you use some figuring out the total cost of ownership on electric vehicles? Or do you need some personalised advice on how to save more fuel in the coming year? Request a free consultation so one of our fleet experts can show you how to save time and money.
