Danny Clenaghan, Arval
For any business operating vehicles, fuel is a significant expense
and current pump prices suggest that this situation isn't going to
change in the near future. Making up around 25% of the cost of owning a
vehicle, and second only to depreciation, fuel costs must be controlled
which is where fuel cards come into their own.
Under a pay and
reclaim system, drivers purchase fuel using their own funds then submit
an expense claim before they are reimbursed. This can mean that drivers
end up out of pocket and makes it difficult for an employer to
influence how and where fuel is bought, or to extract information about
driver performance.
Allocated to individual drivers or vehicles,
fuel cards provide a method of payment that removes this issue,
ensuring that the company only pays for fuel that is purchased and
drivers don't need to dip into their own pockets. What's more, they are
an important tool in capturing powerful data.
Without an
accurate picture of current fuel expenditure it can't be properly
managed, let alone reduced. Fuel card reporting shows what, where, when
and how much fuel is being purchased each time the card is used. This
highlights the mileage that drivers are completing as well as their
fuel purchasing habits from which the business can take action.
For
example, big savings can come through directing drivers to the cheapest
fuel forecourts. In conjunction with information provided by a fuel
card supplier the business can set a price-per-litre target which
drivers aim to meet when they fill up. As a means of doing this,
drivers will often be directed to low price forecourts. The fuel card
captures data on drivers who do not meet this target and an exception
report compiled, allowing businesses to identify problem drivers and
take swift action. While the savings vary, an SME fully committed to
this strategy can remove around 10% of fuel costs.
Fuel cards
also reduce the administrative burden on a business through VAT
invoicing. Collating receipts from different drivers for fuel purchases
takes time and can mean that businesses don't claim back all of the VAT
that they could. Fuel cards eradicate this problem because a single
invoice makes it easy to recover the VAT on fuel purchases. This
removes the need for drivers to retain and submit individual receipts
or for the company to process them.
Without an accurate picture of current fuel expenditure it can't be properly managed, let alone reduced
Businesses
care more about the environment than ever before, often because it has
a direct impact on their costs, or because their customers set
environmental targets. Fuel cards can be used to measure carbon
footprint because they collect management information on the number of
litres of fuel used and type of fuel purchased. This information is
essential to identify current CO2 emissions and then to measure ongoing
reductions.
While these things can provide great cost and
efficiency benefits to a business, remember that not all fuel cards are
the same and some are better than others. It is important to consider:
1. Route deviation - many
fuel cards operate through restricted networks so drivers can only
purchase fuel from a particular fuel brand. While the Arval fuel card
can be used at nearly all UK fuel forecourts, most other fuel card
providers can not match this level of coverage. With a limited network,
drivers have to travel extra distance to find somewhere they can fill
up with their fuel card wasting time and fuel so increasing your costs.
2. Low cost sites -
some fuel card networks don't include the low cost sites (including the
supermarkets). The price differential between the most expensive
motorway site and the cheapest supermarket can be more than 8 pence per
litre which demonstrates that businesses can make significant savings
by encouraging drivers to refuel at these sites.
3. Support - not
all fuel card providers are able to provide the same level of impartial
support, advice and information that you need to make the most of your
fuel card. Some branded fuel card providers have a vested interest in
selling more fuel which may not be in your best interests.
4. Be wary of bunkered sites -
some fuel card products direct drivers to bunkered fuel sites. These
are often not easy for drivers to use with some only suited to HGV
vehicles. Again this is a small network which means that drivers often
have to travel several miles to get to a site where they can fill their
vehicle up.
5. Watch out for hidden costs - make sure
that any quote is inclusive of VAT. Some aren't so the quote appears to
be cheap when in reality it isn't. Also watch out for any handling fees
that could bump up the price that you are paying.
For more information please visit http://online.arval.co.uk
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Post Date: April 15th, 2010