Fleet News

Fuel cards v corporate credit cards: the great debate

IF UK domestic law is amended following the recent ruling on the Sixth VAT Directive, fleets will be unable to recoup the VAT on business fuel without adopting a fuel purchasing system, based on a fuel card or corporate credit card.

Mike Waters, head of market analysis at Arval, says fleets need to understand how both types of card could work for them. One of the main advantages of a fuel card over a corporate credit card is that the former provides fleet managers with accurate fuel management data. To start to reduce the overall fuel bill and enforce a fuel policy among drivers, fleet operators need to obtain data on spend.

UK pump prices remain high, reflecting the volatile global market for crude oil. Waters reckons there has never been a greater need for companies to keep tight control on fuel expenditure.

All fleet decision-makers need to understand the financial benefits of effective fuel management, and the tools which can be employed to mitigate against ever increasing fuel bills.

Waters said: ‘By using a fuel card, fleet operators can gain information on pence-per-litre and miles-per-gallon on all fleet vehicles and drivers.

‘This procedure is not possible with a corporate credit card, which can only give details about location, price and time of fuel purchased.

‘Critically, before fleet managers can start to reduce their overall fuel bills, this cost element needs to be separated from other expense types and made visible before the fuel bill can be tackled.

‘This is not easily achievable with a corporate credit card. Detailed fuel costs are not readily transparent from hotel bills, travel costs and corporate entertainment, making it very difficult to extract meaningful fuel data on each driver.’

However, Waters conceded that a credit card offers a degree of flexibility.

The problem, he added, was that this comes at the expense of control and control is a key element of implementing and enforcing an effective fuel management policy.

He continued: ‘A fuel card can only be used to buy petrol, diesel, LPG or lubricants in a closed network of forecourts.

‘However, credit cards provide the card user with the opportunity to spend anywhere and drivers can purchase additional items which could be swallowed up within the fuel budget. A corporate credit card can be used in any petrol forecourt, whereas a fuel card is confined to a network of forecourts.’

Fleet operators should always look closely at fuel card providers’ networks and establish if a specific card will provide sufficient coverage for all drivers, Waters claimed.

He said: ‘Arval’s AllStar card is accepted at 95% of forecourts across the UK.

‘There is little point in looking to control fuel spend if drivers expend more in fuel looking for a particular brand than they save through a fuel policy.’

Accurate fuel card reporting requires the co-operation of all fleet drivers, who have a responsibility to provide accurate mileage information and their vehicle registration at the point-of-sale.

Fleet operators should stress that the vehicle and fuel is a company resource used for business travel, and in many cases for private travel (for which drivers are accountable) and should be respected as such.

Waters reckons one of the key benefits of using a fuel card over a corporate credit card is the number of report types available, which can be regularly produced from fuel card data.

Typically, these could include target pricing reports to mitigate against rising pump costs, MPG improvement statistics to highlight good or poor fuel economy performance among drivers and vehicles, suspect transaction reporting to identify abuse and suspicious card behaviour.

He added: ‘Other options available include vehicle transaction reports that can provide full details on pence-per-mile, operating costs and total miles travelled.

‘To ensure that drivers are providing their mileages at the point-of-sale, zero mileage reports can also be used to pin-point drivers who do not adhere to company fuel policy.’

For the busy fleet operator, data is available in a range of report formats. Arval’s online Interactive system, for example, allows clients to access their accounts and run and customise their own reports whenever required.

Arval claims administration is dramatically reduced because fuel card management systems can produce a single, consolidated, cost-centred invoice for an entire fleet that doubles as a VAT receipt for every purchase.

Waters said: ‘A further benefit of a fuel card is the ability to monitor how much drivers pay for fuel by implementing target pricing initiatives.

‘By using this method, fleet managers, in conjunction with the information provided by their fuel card supplier, can set a designated price-per-litre target which all drivers should look to meet when they fill up.

‘This could be set for a regional average price at the pump with a parameter set for two pence over that price.

‘The fuel card will capture data on all drivers who do not meet this target and an exception report can be compiled.’

Arval reckons that fuel cards remain the only VAT-approved fuel procurement system that can capture detailed fuel data on all drivers across a fleet of any size.

Waters added: ‘In an age of high prices at the pump, fleet operators need fuel procurement systems that not only ensure they are able to reclaim VAT where it is due but will provide a vital tool that will help to manage fuel bills in a pro-active way.’

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