Controlling Fuel Spend in a Decentralized Fleet
Effective fuel management is an integral part of a fleet operation. A NAFA Fleet Management Association guide explores the tools available for commercial fleets to manage the second-highest fleet expense.
(The following material is based, with permission, on The Fuel Management Guide, produced by NAFA Fleet Management Association.)
By their very nature, decentralized vehicle operations require the ability to refuel in a variety of geographical locations at potentially any time of the day or night. Fleet managers responsible for decentralized fleets have a variety of tools at their disposal to fuel their fleets. The following text covers the primary tools for most fleets:
- Fuel cards & credit cards.
- Controlling driver habits.
- Price risk management/hedging.
Fuel & Credit Cards Differ
A fuel card is not a credit card and has its own uses and benefits. Both fuel and credit cards eliminate the need for cash. Beyond that, however, their similarities primarily cease at appearance.
There are several types of fuel cards:
- Corporate travel and expense (T&E) card.
- Fuel company-branded.
Universal & Co-Branded Cards
Universal cards offer fleets optimized fuel data management and give broad station access. A universal fuel card usually is used only for fuel; however, in recent years, controls have been added to allow use at repair shops for a limited number of repairs or limited dollar amount. Card providers have also established agreements with national repair chains for acceptance of the universal card, sometimes at a discounted rate. A universal card carries only the name or brand of the fuel management company.
Co-branded cards bundle fuel management and billing through a fleet management company with the lease. Leasing company fuel cards are typically co-branded with a universal card. Both cards may have various levels of controls regulating the type of sale and the maximum amount of any one specific purchase or daily total spend amounts. High-level purchasing data profiles can provide the ability to analyze data in many ways. These cards may carry a monthly fee, which may be negotiable.
With a universal fleet fuel card, organizing and managing a fleet fueling policy is easy. Most programs are designed to minimize fuel costs and reduce time spent managing a fleet's fuel. Since most fleet fuel cards are accepted at most locations, a fleet will always have a fueling station nearby.
Even if running out of fuel is not a primary concern, time is wasted if the fuel card is only accepted at a few locations. Day after day, drivers would have to travel out of their way simply because their routes did not coincide with a fueling station that accepted a fleet's card.
Most universal fleet fuel cards provide comprehensive driver, vehicle, and exception reports to help track fleet's activity within broad parameters set by the fleet manager. A broad number of features are offered by fleet fuel card providers. Depending on a fleet's need, common features to consider include:
- Purchase Control. Cards should have the flexibility to be assigned to either the driver or vehicle, with purchases controlled through an assigned PIN. A fleet manager should be able to limit purchases by product, number of transactions per day, time of day, and/or dollars per transaction, day, week, or month.
- Exceptions Monitoring. Key purchasing information collected should include date, time, location, odometer reading, driver name, product type, unit, cost per unit, and total sale for each transaction at the point of sale. However, fleet managers should have the ability to define their own exceptions. Exceptions should be tracked by vehicle or driver and include miles per gallon variances, pattern discrepancies, product variances, and excess fuel purchases.
- Flexible Reporting Options. Re-ports should be available in various media formats at various detail levels, with the most detailed broken out by vehicle and/or driver.
- Tax Exemptions. The fuel card company should be able to report and calculate various tax exemptions allowed by law at federal and state levels and bill the fleet net of the exempted taxes.
- Convenience. Drivers should only need one card, and it should be accepted at most stations. Most fuel cards can be used as pay-at-the-pump so further time is not wasted in lines at the cash register. If a fleet deploys vehicles that go into Canada or Mexico, make sure the card is accepted in those countries.
- Online Customer Access. In today's electronic world, fleet managers should have a great deal of online access to their fuel card accounts. This access should include viewing unbilled transactions, month-to-date exceptions, vehicle and driver information, payments, and adjustments. Fleet managers also should be able to perform a number of functions online, such as: adding drivers/vehicles, reporting lost/stolen cards, issuing new/replacement cards, updating driver/vehicle information, and modifying personal identification numbers.
- Billing & Payment Options. Many fuel card companies offer flexibility in payment options, including electronic transmissions, checks, or a combination thereof.