?Diesel Fuel Prices Getting To You Or Bad Fleet Fuel Auditing
Fleet management it is essential to have auditing of fueling purchases.
Your company has worked hard to get the right fleet fuel program in place. You have picked the right fleet credit card provider, and you may have negotiated and set up some fueling discounts with your fleet card provider, mobile fueling company or truck stop provider. However, the fleet management task has only just begun to be able to maximize on lower diesel fuel prices.
Companies often neglect to monitor their fleet management programs following the original set-up. Some companies do review fleet card transactions or exception reports. However, do they review all reports, check for duplicate transactions, or confirm discounts are applied properly? Many companies cannot perform this level of scrutiny because they lack the time or tools to check. How should companies audit diesel and gas invoices?
Anyone that is reading this article who is in the fleet management solutions department clearly knows that your company:
ï¿½ Won’t pay for fueling data because it appears expensive. ï¿½ You have other jobs so nobody is 100% dedicated to your fuel management systemï¿½ You’re in a job with fueling that you don’t have a strong background or no backgroundï¿½ The field operations people have less time or experience then you do about diesel fuel pricesï¿½ No time, no communication, poor data and you have a bad situation in fueling department
Audits Require Time & Data
Staff time and access to relevant fueling data are the first elements in a successful purchase & auditing fuel management system for your company.
A few tips to facilitate this process include:
* Subscribe to a fuel price service.
* Have a “”sense”” of the fueling market.
* Hire an outside service to review your fuel management program.
Diesel price data is available through Oil Price Information Service (OPIS), Data Transmission Service (DTN), or other diesel fuel prices published daily at a local level. Broader-range indices, such as the New York Mercantile Exchange (NYMEX), Department of Energy (DOE), and the Automobile Club, provide national diesel pricing.
While these national services offer a big picture view of diesel prices, they can also obscure the various price differentials distinguishing one area from another. Local indices provide more accurate fueling price data.
These services are not cheap to purchase, but they are essential to a successful fuel management program.
Duplicate transactions are another fuel management program invoicing issue to track. These errors occur more frequently than commonly realized. When hundreds of thousands of fueling transactions are produced each day, mistakes happen. If invoices are not monitored carefully, a fleet manager can miss duplicate transactions, and there’s a good chance the fleet fuel card provider won’t catch the mistakes as well or the fuel card company made the mistake. With fueling transactions being processed in ‘real time””, batched, file delays and other ways that would only make you scared, you bet there are mistakes all of the time.
Guidelines in monitoring fuel reports include:
* Develop a good “”feel”” for the monthly volume and transaction count.
* If purchased volume or transactions are higher than normal, dig deeper into reports.
* Randomly sample 5 percent of monthly fleet invoices and closely review the selected transactions.
Again, it is all about time, resources, experience we do fuel analysis and fuel audits on all fueling transactions.
Implement Checks & Balances
Fuel is among fleet’s top five expenses, and hundreds to tens of thousands of transactions happen each month as part of a fuel program. Successful programs require a good checks-and-balances system. One of the best checks is performing monthly fleet fuel audits of the fleet management operation.
A fleet might have trucks fueling off-road equipment or reefer units, putting all that volume on the same transaction. One fleet fuel card for each truck, equipment, reefer, small tank, etc, is recommended to accurately capture every drop of fuel and where it went. A few fuel card providers will allow for another transaction to be attached to the on road diesel fuel.
Accurate records of where the fuel is used are critical. If on-road fuel is used in an off-road application, as much as 50 cents per gallon or more in extra, unnecessary taxes could be spent. In other words, fuel tax should be paid when fuel is purchased, but accurate record keeping allows fleets to file for a tax refund with the federal and state government. Those 50 cents per gallon can add up quickly. You don’t want to give up that kind of money anymore than you don’t want to buy diesel fuel additives.
Another critical benefit of accurate record keeping is the ability to spot incidents of fuel theft. Most companies would downplay the possibility employees would steal from them. However, the national rate for fuel theft is 1.5 percent of a company’s fuel budget on overall fuel purchases. That rate rises to more than 3 percent when dealing with a fleet of gasoline-powered vehicles. The more controls in place, the greater the control over one of fleet’s top expenses.
Giving Money Away
An old expression holds that what isn’t inspected is not respected. By neglecting to perform daily fuel management audits on fleet fuel purchases, companies could be literally giving money away. It would not be surprising for someone like myself to see thousands of dollars a day go away from a company in fuel savings because it has been stolen. Companies think they have good diesel fuel prices or their fuel cards are protecting them. Don’t be so naï¿½ve, it could be costing your fuel management department or I should say company a lot of money.
Most often, fuel invoice errors are not the result of unethical business practices or nefarious individual actions. Generally, errors are the result of an incorrect account set-up or account change. If invoice numbers are not audited, they look like what they are – simple numbers. However, when fleet managers “”peel back”” the first “”layer”” and take a deeper look, comparing the numbers to a benchmark, the figures become numbers with a purpose.