Keep fleet expenses under control

If you read nothing else, read this . . .

• Rising fuel costs are pushing fuel expense monitoring up the agenda.

• Fuel cards and mileage monitoring systems can help identify how much drivers are spending and where.

• Using fuel cards with other systems may reduce fuel consumptions.

• Systems should not be a complete substitute for line managers, who may have to monitor problem drivers.

Fuel now makes up a major part of fleet expenses and employers must keep it under control, says Sarah Coles

Fuel was once a drop in the ocean compared to other fleet costs. Fuel cards for business and private mileage were handed out like sweets, while fleet managers focused on controlling the costs of highly expensive cars. Since then, the pendulum has swung. The cost of the average car has fallen as a percentage of the benefits package, while the cost of fuel is soaring.

In May this year, the AA’s Fuel price report showed that unleaded petrol reached an all-time high of 136.9 pence per litre. Although the price dropped slightly in subsequent months, experts say volatility and high prices will remain. AA president Edmund King says: “The cost of motoring continues to be the top concern of motorists.”

Offering fuel for private mileage is therefore now a rarity, and where it must be offered for corporate mileage, every effort is being made to cut the cost. This means employers monitoring what is spent on fuel, how much is being used, what distances are being covered and whether claims are exaggerated.

But monitoring receipts is a huge burden for employers, says Paul Jackson, managing director of The Miles Consultancy (TMC). The alternative is to use fuel cards, which can be used to pay for petrol directly at the pump.

This enables employers to see how much fuel is being bought and where. Employers can then tell drivers to avoid high-cost fuel, such as at motorway service stations, and use the cards to check whether this instruction is being followed. But this alone is not enough. Jackson says: “We must be called into four organisations a week because employers are having so little reimbursed for private mileage on a fuel card spend. They might spend £400 a month on fuel and are paid back only 12%. The split should be roughly 60:40.”

Further checks for fuel cards

Fuel cards require further checks, which may mean using them in conjunction with other systems, some of which have been shown to reduce fuel consumption. Jackson says: “A system can map the date an employee filled their car. If they drive a Ford Mondeo, for example, [the system] would know they can get 400 or 450 miles from [the fuel]. If they then input mileage of 50 miles a day for three days and fill up the car again, it would know to expect a repayment for 250 personal miles.”

But employers should not forget the importance of line managers when tackling expenses. Some systems require drivers to plot all the addresses they travel to each day on a website, which calculates their mileage. This data is sent to the employee’s manager for authorisation before fuel expenses are reimbursed. Marcus Puddy, head of consultancy services at Lex Autolease, says: “There is a line manager responsibility to establish whether mileage claims are valid.”

Some systems perform other checks. For example, if an employee inputs less personal mileage than the system is expecting, they will be blacklisted and their mileage and fuel claims checked manually each time.

Ian Hughes, commercial director at Zenith, says it is worth investigating all the options. “There is nothing that employers can do about rising fuel prices, so they must do what they can to mitigate the impact.”

Read more articles from this month’s Special report on fleet management

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