New ‘integrated funding’ products allow employers to get much more from their car schemes without major implications for costs or administration, argues Richard Schooling, commercial director of car scheme provider Alphabet.
Over the years, successive funding products have been held up as the ideal way to deliver car benefit solutions.
Contract hire, PCPs, ECO schemes and other solutions do indeed have their own specific advantages in different situations but the reality is that no single form of funding works out best for all drivers.
One obvious answer to the question of providing car benefits tailored to different groups of employees is to use more than one type of scheme: for instance company cars or an ECO plan for business drivers and an affinity scheme offering attractively-priced car packages for other staff.
However, this approach tended to be ruled out because of the cost and complexity of administering a plethora of suppliers, finance agreements and tax arrangements.
That is now changing thanks to new products that deliver the benefits of multi-funded schemes without the administrative headaches.
These multi-funding or ‘integrated’ schemes offer companies two primary advantages over traditional approaches to car benefits.
Firstly, they bridge the gap between fully-expensed company cars and cash, enabling employers to provide working drivers with ‘best-fit’ car packages rather than an all-or-nothing choice.
Secondly, because responsibility for running the scheme is outsourced to a single supplier, the employer can provide a wider range of better-fitting car benefits without seeing costs rise or administrative headaches increase.
Together, these factors can considerably increase the attractiveness of a car scheme and lead to significant rises in the level of participation by employees – a key consideration now that cash alternatives are widely seen as risky from the point of view of health and safety and employers’ liability.