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Fuel cards: cutting costs at the pump

The escalating fuel price has put vehicle running costs into the spotlight as companies struggle to keep a cap on expenditure. A fuel card could be the answer, says Fuelcard People general manager Steve Clarke.

If there is one thing that all businesses have in common, it is the need to keep an eye on costs. Anything affecting the bottom line must be monitored, controlled and minimised. It is never easy, but can sometimes be straightforward: if there are several possible suppliers of a product or service, you can shop around.

Fuel is rarely reported as a single company wide cost item. Most companies spend more than they realise.

Too much choice can be frustrating especially knowing that you could probably find what you are looking for more cheaply just around the corner. The time to find it, though, could mean that shopping around wipes out any potential saving.

Shopping around

Refuelling a company vehicle is the classic example. The first forecourt might not be the cheapest in the area, but it is not worth hunting around for a better deal which may not even exist.

In an ideal world, you would always know where to find the cheapest fuel, anywhere in the country. Even better, you would be able to find it at a discount. Best of all would be to fill the tank cheaply but delay paying for it, with interest-free credit.

Checklist: fuel cards

Make sure you ask the following questions before you pick a fuel card scheme:

What are the savings?

Is there a dedicated account manager?

Is there 24/7 internet account access?

Do you provide customised reporting?

Is there early warning of non-standard usage?

Does the scheme comply with the EU 6th Directive?

What is the size and scope of the network?

Is there a wide range of cards?

Is the scheme local or national, does it include motorway services? 

Suggest this to virtually any truck driver and, puzzled, they might ask why you do not have a fuel card. Hauliers, coach firms and other high-mileage business users have enjoyed all these benefits, and more, for years. Now, fuel card benefits are widely available.

If you spend £500 or more each month on petrol or diesel, and can pass the normal credit check, you qualify for a fuel card. So, how could they save you money?

Fixed prices

It works like this. You apply for a fuel card, requesting enough cards for all your drivers. Each card comes with a guide to the sites where it is valid - 1,400 or more filling stations nationwide in some cases.

Your supplier then notifies you, typically every Friday, of your fixed national price for the coming week. This is normally around 2p to 3p below national average pump prices, which can mean as much as 10p per litre below motorway prices.

When a driver needs fuel they check the guide for the nearest site, refuel as normal and then present the fuel card.

Each week, a single invoice covers all of your vehicles. This is paid automatically by direct debit, with the gap between refuelling and payment meaning up to a fortnight of free credit. You should be offered customised reports and 24/7 internet access to your account information. You should also be able to telephone with any account queries.

The obvious benefit is the lower fuel bill, but there also indirect savings from reduced administration. You have a single invoice to manage, rather than piles of receipts. More importantly, the account management services will allow much closer monitoring and control of fuel expenditure. From a security perspective, your fuel card can only be used for authorised purchases and is restricted to the driver or the vehicle.

Assessing expenditure

The first thing you need to do before setting up a fuel card scheme is to calculate overall expenditure on fuel. Ask whoever reconciles those piles of garage receipts. It usually comprises a lot of relatively small bills, so fuel can be hidden among overall costs and is rarely reported as a single company-wide cost item.

Most companies spend more than they realise. Anyone spending in the high hundreds of pounds monthly - or more - would benefit from a fuel card.

Choosing a card

The challenge is to find the right fuel card for your particular needs. If you contact a provider which offers only one type of fuel card, they will want to persuade you that they have the answer, regardless of your circumstances. No single fuel card, though, can be the right answer for everyone. The trouble with fuel cards is that people think of them as discount cards. This can be right: a particular card's benefits can begin and end with cheaper fuel. Not all cards are the same and some do not even offer discounts.

If your drivers mostly drive locally, a fuel card network that focuses on motorway refuelling will probably not be ideal. It could be perfect, though, if you have vehicles travelling up and down the motorways.

The provider you contact should want to know about your circumstances: do you have cars, vans, pick-ups, HGVs or a mixture? Do your vehicles run on diesel or petrol or do you have mixed usage?

The main benefit will normally be cost savings at the pump, but look beyond this. A driver can need more than fuel. What about lubricants and, if you have HGVs, AdBlue? Some fuel cards handle these, others do not. Make no assumptions and ask the question.

One major advantage may not be obvious: you are invoiced directly for fuel, rather than drivers paying and being reimbursed. This matters because of the European 6th Directive, which says that if drivers buy fuel within the EU, you can reclaim the VAT if you have been invoiced directly for it.

Customer service

A fuel card should save money and management time. The fuel management headaches will remain, however, if you have difficulty keeping track of spending.

Look into the service levels on offer. Can you access up-to-date account details 24/7, including the very latest transactions, via the internet?

Whichever fuel card you pick, you will want to talk to somebody sooner or later, so find out who it will be. Will you be ringing a random, anonymous voice in a call centre or talking to a dedicated account manager?

Examine the fuel card options and pick one that most suits your circumstances. If you are unsure, any reputable fuel card provider will be able to answer all of your questions in a single telephone conversation. You should normally be able to apply for your fuel card at the same time or online. Do remember that in either case, as you are applying for free credit, you will be sent a standard application form for your signature. It is much the same process as applying for a credit card.

The key thing to remember when considering fuel cards is that they are not all the same. Ask about savings, service and security. Ask lots of questions. Pick a fuel card but don't pick just any card.

Steve Clarke is general manager of Fuelcard People
www.fuelcardpeople.co.uk