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Fuel Programs Should Go The Extra Mile

May 2017, by Jennifer Gordon

The low cost of fuel has been good news for fleet managers over the past several years. As prices have dropped a whopping 50 percent since 2008, attention to fuel spend has taken a back seat to other concerns such as maintenance and acquisition costs. However, the fuel line item still represents a significant percentage of fleet budgets and many organizations may be missing out on discounts, payment structures and data-gathering opportunities that will save money today and have them better positioned for the future should prices revert to their historically volatile state.

There is a lot of low-hanging fruit to be had when leveraging purchasing power and a number of ways to save money beyond cost-per-gallon when you look at fleet expenses holistically. Ideally, organizations should be arming themselves with all relevant vehicle data in order to negotiate the best discounts and identify ways in which the fleet as a whole can operate more efficiently. They also need to be tough customers when it comes to fuel program payment terms.

Better Prices & Flexible Payments Are Possible

While most providers offer discounts or rebates through fuel cards, very few offer flexible payment terms as well. The majority require companies pay weekly or even daily, a practice that puts a strain on cash management. This is where working with a partner like Merchants Fleet Management can make a difference. Merchants gives its clients the option of paying daily, weekly, bi-weekly or monthly, which means the companies they work with have much more control of their outlays. Considering how large some fuel payments can be, the ability to hold that capital for a full month is a tremendous advantage and few providers offer it.

Maximizing Purchase Power

Another significant benefit to working with a partner like Merchants Fleet Management is the ability to implement real-time data integration and analysis that captures usage statistics. That information can then be leveraged to secure the best fuel-purchasing option as well as discounts on insurance, maintenance and even vehicle acquisition. This holistic approach can significantly reduce the total cost of ownership across a fleet and you don't have to have a large number of vehicles to get the best deal.

Organizations with larger fleets are absolutely in the best position to leverage their purchasing power to negotiate rebates on each gallon purchased, translating into significant savings. Fleet management companies can take that advantage to the next level when they leverage the collective buying power of a portfolio of fleets.

Merchant's Fleet Management, for example, provides large-fleet level discounts to all its clients regardless of individual fleet size. Price reductions can be as great as six cents a gallon. In addition, Merchants Fleet Management's TotalView fleet management solution provides analysis that combines fuel-spend data with vehicle information that clients can use to make cost-management decisions, track the impact of new programs, and inform future vehicle selection.

Pick A Card

Selecting a fuel program often means deciding on what form of plastic to use. Fleet management companies will often use a preferred provider, typically through Visa or MasterCard. Gas companies such as BP and Chevron also have fleet-specific card programs that essentially work like department-store-issued products. The card limits purchases to those vendor-specific stations, but, the more money spent using the card, the more the client gets back in the form of rebates, discounts and other special offers. The MasterCard and Visa cards also offer discounts and rebates with the added benefit of being accepted everywhere.

P-Cards Can Be Rewarding, But….

Some companies may already have corporate purchase cards, a.k.a. "P-Cards," in place, so drivers could use them just like any other employees making purchases on behalf of the company. All the major banks offer corporate card products and will work with companies to create rewards programs that provide rebates, discounts and even perks like access to airport lounges, which helps with employee morale and general corporate expense tracking, but does little for fleet management beyond the convenience of drivers not needing to be reimbursed. 

Additionally, because these cards are processed just like any other credit card, it can be difficult to track and limit non-fuel purchases.  It may be possible to identify general fleet-related purchases, but the opportunity for valuable analysis is limited. While it might seem administratively burdensome to have a fleet-specific card program in addition to a corporate P-card, it can actually cut down on administrative hassles.

Fraud Deterrent

Detailed measuring and monitoring fuel spend also helps companies detect suspicious purchase activity and prevent fraud. With a fuel card program, fleet-specific purchases are captured on one account and cards can be customized with purchasing and merchant restrictions to ensure the cards are only used for vehicle-related purposes.

When integrated with vehicle data, managers can even receive alerts if a purchase exceeds tank capacity. Exceptions are easy to spot because overall spending trends are monitored through consolidated billing and that consolidation can also provide valuable insights into overall fleet operating expenses.

 

Tracking Trends & Managing Costs

When fuel programs are part of a complete fleet management system, fuel spend becomes a critical piece of actionable information. By coupling fuel purchase data with real-time odometer readings and maintenance schedules, managers get a complete understanding of vehicle performance. It has a circular effect as proper maintenance, particularly timely air- and oil-filter changes and proper tire pressure, keep vehicles running efficiently which improves miles per gallon. Having all the mileage, maintenance and fuel data available also informs decisions about which vehicles are right for which jobs so managers can assign them based on usage and make changes, if necessary, when the time comes to upgrade the fleet.

Many companies are also interested in improving fuel efficiency as part of a commitment to reducing carbon emission. Tracking mileage and fuel spend over time keeps everyone focused on the goal, and most systems can also monitor idling time, speed and break usage which can be used to educate drivers on how those behaviors impact fuel efficiency.

Having Your Cake

Getting the best pricing and the best payment terms for fuel and other operating expenses is having your cake and eating it too. It is worth investigating all the options and discussing the different programs a fleet management company offers to ensure you have a program that really works for your organization. One size does not fit all. If you want to work through a fleet management company, ask the tough questions, like what are the payment terms, how much can their fuel program actually save per gallon and how do the costs of an integrated vehicle data solution play into the total cost of ownership for a fleet per year. A good fleet partner will work with you to customize programs and technology solutions to fit your needs and provide the analysis to ensure you are getting the most out of those services.

About the Author - Jennifer Gordon

Jennifer Gordon joined Merchants Fleet Management in March, 2012. As Product Sales Consultant, she supports the sales process as a product expert to increase penetration of the Merchants fleet service offerings. Jennifer is responsible for product growth of new prospecting accounts and existing clients.

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