Learn How To Build A Fleet Management Budget In 4 Easy Steps

Learn How To Build A Fleet Management Budget In 4 Easy Steps

No matter how many parameters there are in judging the success of a fleet, it always comes down to money. And the cardinal rule to making profits is managing the money you already have. A fleet budget is a rightful determinant of well-run operations. The success of a fleet is often measured by how its manager manages or controls the expenses. A budget, when created thoroughly, can help a fleet set its financial target and highlight the areas that need improvement. 

Budgeting is tedious work. Without enough information, anyone can find it a complicated and time-consuming process. So whether you are a veteran fleet manager or new to the role, here are some steps that you can undertake to create a functional and flawless budget for your fleet. 

Fleet Costs Or TCOs

Calculating and managing expenses should be the focal point for any fleet. It all starts with determining and calculating the fleet costs, also known as the total cost of ownership. Knowing the TCO  helps with budget management, allowing you to take proactive decisions for asset replacement. 

First, let us understand what TCO is. 

Fleet cost or total cost of ownership is the total cost associated with asset management. It includes costs related to the purchase and maintenance of vehicles in the fleet

There are two types of expenses categories comprising TCO:-

Fixed cost: 

As the name suggests, this category is for fixed expenses that include taxes, purchase, loan or lease payments, insurance, registration, depreciation, etc. 

Variable cost: 

This type of cost fluctuates every month due to various factors. It includes parts replacement, fuel expenses, maintenance, parking, tolls, etc. 

Among the above, fuel and maintenance costs constitute the largest operating cost of a fleet. And hence, it is significant for a fleet manager to monitor these expenses and take action to control them. 

How To Build A Fleet Management Budget?- Four Simple Steps To Follow

Set Goals

Planning for a budget is just like planning for everything else. So the first step is identifying your goals. But your goals must be realistic. And to do that, you will need to go through your previous budget or financial performance. 

First of all, you should begin by specifying goals for your fleet. One of the ways to do so is by SWOT analysis

SWOT analysis helps a business identify its strengths, weaknesses, opportunities, and threats. For example, it can help you identify where you are overspending or where you have to spend a little more than usual. And also which asset you have to purchase or replace to improve your productivity.

SWOT Analysis
Fleet Management Solutions Market SWOT Analysis by Advancement from 2019–2025 | Arvento Mobile Systems, Astrata, Autotrac

You can construct your budget according to the goals decided for the upcoming year. It will help you to allocate money to various operations under a set strategy.

Some of the expenses that a fleet has to incur are: 

Review Previous Year Expenses

The second step is reviewing the past year’s expenses. Reviewing the previous budget helps the fleet manager identify mistakes and look for room for improvement. 

It is also important as you can use it to develop the baseline for the current budget.

It can also help them to access the answer to various questions:

These questions will not only help you to identify where you were wrong but what measures you have to take this year to correct those mistakes. 

For example, if the maintenance cost is higher than usual, you can select a fleet management software such as Matrack for preventive maintenance schedules and service reminders. Or arrange a driver training program to help drivers overcome reckless driving behavior.  

Budgeting Technique

An ideal budget is well prepared for the upcoming future challenges. It is prone to unexpected costs and inflation. 

There are two different techniques you can use to cope with the fluctuating costs: 

Incremental Budgeting

It is one of the most common types of budgeting. A flat increase, say 4 to 5%, is added to the previous year’s expenses. This technique tries to make adjustments for unknown expenses such as inflation. 

While this is an easy way to cope with the fluctuating cost, it has some major shortcomings. 

First of all, it does not assess whether the spending done in the previous year was appropriate or not. And secondly, it may encourage overspending. 

This technique can help small businesses or new owners operators to outline their budget but can be detrimental to large fleets.  

Zero-based Budgeting

The zero-based budgeting technique is more detailed and rigorous than the incremental method. 

According to this, the budgeting process starts from zero without considering the previous year’s expenses. A manager has to review the expenditure of each fleet and approve it accordingly. 

This technique aims to achieve an optimal allocation of the resources by making managers justify each expenditure.

The whole process involves five different stages:

To start with, you have to ask yourself these questions:

Monitor, Control, And Reassess Fleet Budget

After you have completed the above process, all that is left is to keep everything in alignment. You have to periodically examine the actual expense and income against the projections in the budget and make changes if needed. 

You can make monthly, weekly, and even daily reviews according to the situation. You can also benchmark the budget against your previous year’s expenses for more clear insight. 

How Can Matrack Fleet Management Reduce Expenses?

The Matrack fleet management software helps you determine all of the above expenses. It also calculates your fleet TCO automatically, saving your time for other activities. 

Fuel is the largest expense of a fleet budget. The Matrack offers you a fuel card to provide you with discounts on fuel purchases. You can integrate it with fleet management software to get a broad overview of the fuel expense of your fleet. It automatically updates the data according to the fuel purchase made. So you don’t have to waste your time manually entering the fuel receipts for better fuel consumption data. Additionally, you can integrate Matrack fuel card service with the fleet management software to receive 10-15% off on fuel purchases and IFTA refunds. 

Maintenance is the other major expense of a fleet operating cost. Matrack helps you stay on time with vehicle maintenance with features like preventive maintenance schedules and service reminders and save up to $5k. By tracking every aspect of your maintenance, you can prevent unexpected breakdowns and improve the lifetime of the vehicles.  

With complete visibility over your expenses, you can save yourself from overspending. 

Apart from this, Matrack can also help you to save money in several ways:

To know more, click on the link.


As a fleet manager, you are responsible to monitor and control expenses. And for this, you have to learn how to make a budget.

To make a failproof budget, you need to have proper knowledge and data on various operations. A fleet management software like Matrack can help you with that. 

Matrack fleet management software can be helpful for the budgeting process. It provides you with significant data insights to identify new ways of cost-saving. When your budget is ready, it can help you to track fleet operations and associated expenses.

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