Saving money with a fuelcard

Fuel is one of your largest costs, so it’s vital that the purchasing process is tailored to suit your business’ particular circumstances. Tim Deakin finds out that a fuelcard may be the best bet for smaller operators, taking away both risk and cost.

In the past, a large diesel tank in the yard was the method by which most operators refuelled. While it’s still generally the best choice for a large garage, if you’re a smaller operator, or one whose vehicles don’t return to base every day, there is a growing move towards fuel cards, which may be a more economical and less risky option.

“To fill up a large tank in a yard, which in some cases will hold a month’s worth of fuel, is a significant cost,” says Steve Clarke, Group Marketing Manager at The Fuelcard People.

“Oil distributors rarely give a month’s credit any more. It’s more likely to be seven days’, and then the operators must pay for almost a month’s fuel in advance.”

Be sure to consider price fluctuations when thinking about getting fuel at the lowest possible cost, he adds. The oil market is less stable than it used to be, and prices vary from day to day. That means if you do buy a month’s worth of fuel in bulk, you could have paid over the odds if the price then drops even by a penny per litre.

A fuelcard allows you to remove that risk. Companies such as The Fuelcard People have buyers who play the oil market to secure the best price; a complicated process, using a combination of average and ‘spot’ figures. The operator is then given a price for all the fuel they purchase the following week.

“We tell a customer the price on a Friday and it’s valid from Sunday to Sunday,” says Steve. “The operator then knows exactly where they stand for the following week. But if for some reason our figure isn’t competitive, there’s a choice. They don’t have to use our cards.”

A simple process

Each card attracts an issuing charge, but after that the only cost to the operator is of the fuel consumed. There is no usage fee. A variety of cards are available, so it’s important for operator and supplier alike to make sure they go for the right one.

“We ask new customers a series of questions about their operation and where they normally fill up,” Steve continues, and in the case of a coach operator travelling the country a card with good motorway coverage is usually judged best.

There’s a clear benefit to using a fuelcard when filling up on the motorway. It removes the price premium which would otherwise come into play. “Coach operators benefit because our prices are no higher at motorway filling stations than they are elsewhere; operators still get a discounted price, and don’t need to waste time by diverting to fill up.

“The price on the board at the filling station is irrelevant. Drivers don’t need to look at it, and it doesn’t show up on the receipt, which shows only the number of litres purchased. The invoice from ourselves will show the fixed price, calculated the week previously.”

The Fuelcard People delivers one such invoice per week to each customer, will full details of all purchases, in either electronic or paper format. There’s no need to issue the driver with a cash advance or company credit card and hope they don’t lose them. E-mail and SMS alerts to unusual activity can be built in to a customer’s account, which can be accessed at any time via a secure internet portal.

“For example, if an operator wouldn’t expect vehicles to be refuelled at the weekend the system will generate an alert if it does happen. If you only ever use diesel and someone draws petrol then that can be flagged up, or if the operator wanted to know whenever less than 50 litres was drawn, we could build that in.”

Cards are also configured as standard not to permit shop purchases, an important consideration with many filling stations now having small supermarkets on site. That can be manually un-ticked if you do want to give your driver the facility to purchase other goods, but the security aspect is one of a fuelcard’s principal attractions for many operators.

The benefits

Each customer has their own account manager, and one of their jobs is to monitor unusual buying patterns. “We sell our cards on the savings, security and service we offer,” says Steve.

“We also cut down on the amount of administration because there’s no reconciling of receipts to be done. But the biggest thing we give is the discount on the pump price, which is the same across the country. We’re looking at in the region of 5p per litre at off-motorway stations and around 9p per litre on the motorway, so there are significant savings to be had.”

There are also reductions in terms of administration time, and that also applies to operators whose vehicles spend time on continental work. Through an online interface, customers have access to a system which allows them to cancel and order cards and generate reports.

“The data we have is what fuel has been used, how much, by which vehicle, when and where it was added and at what cost,” he continues. “Taking those elements, we can run reports in any way an operator could require. We can also configure them in Excel format to be loaded directly into their own system.”

The European aspect applies through The Fuelcard People’s tie-up with Shell, through which it offers a card for use on the continent. It delivers a fixed price for a whole country, with access to the week’s rates via a website; the only exception is Germany, where prices are regional.

“We also do VAT reclaim for the whole of Europe in collaboration with Shell,” Steve adds. “Fuel purchased in Europe can either be put on a separate invoice, or on the same one as domestically-bought diesel. It means that an operator doesn’t have to spend time reclaiming VAT from each individual country.”

A money saver

The ability to cut costs, remove the potential insurance liability of a large stock of diesel in your yard and streamline administration shouldn’t be sniffed at, and companies like The Fuelcard People can use their purchasing power to reduce your fuel spend.

It sells around 700m litres per year and has a turnover of 680m, with 350,000 of its fuel cards in use. “We’ve got lots of small customers,” says Steve.

“They receive the same benefits as our biggest clients: a dedicated account manager, downloadable reports – but without tens of thousands of pounds sitting in the corner of their yard. With a fuelcard, they pay for diesel as and when they use it.”