Savvy Budget Management Fuels Government Fleets
With the right fuel card program, government fleets reduce the amount of fuel purchased, and account for every gallon of this costly commodity.
Edited by Katherine Frisch, Editor
Cost control is a reality for most organizations, but perhaps no one bears the brunt of it more than those managing government agency budgets. Every penny of taxpayers’ money must be accounted for, and every penny that can be saved must be saved. With escalating fuel costs, public agencies may not consider their fleet fuel budget to be an area where they can control costs. However, a fleet fuel card program offers purchasing departments the opportunity to partner with fleets to streamline processes, reduce time-consuming administrative tasks, set effective internal controls, decrease the instance of unauthorized purchases, and save.
The purchaser can help drive savings by looking for key features, options, and solutions matching the needs of government agency fleets, such as:
- Purchase controls
- Detailed, auditable reporting
- Downloadable transaction detail
- Up-front tax exemption
- Captive site (onsite) fuel management
- Cost-plus pricing
Once fuel purchase policies have been set and shared with employees, the next step is to implement a fleet fuel card program with the right purchase controls to help prevent unauthorized purchases.
Purchase Controls Drive Fuel Savings
In May of 2006, the State of Utah awarded its contract for an electronic fuel dispensing system network to FleetCor. The state has held a contract with FleetCor for the previous 16 years. Top considerations in awarding the two-year contract included service capabilities, the number of sites in strategic locations, security, and purchase controls.
“Hard controls” are part of a fuel card’s programming and include options such as limits on the number of transactions per day, as well as time-of-day, day-of-week, and fuel grade restrictions. Fuel card program providers have introduced a gallons-per-purchase limit designed for government fleet customers with different types and sizes of vehicles in the same fleet. This control allows fleet managers to set card limits based on the tank size of each vehicle.
Today’s fuel card systems allow authorized fleet representatives to access card information online, order and assign new cards, and choose the right controls on a vehicle-by-vehicle basis or a driver-by-driver basis.
Utah’s fleet managers are able to lock out, reinstate, and modify authorization parameters of any vehicle or driver from a centralized location at any time—effective immediately. The state and its agencies have total authority to specify who can purchase fuel, which vehicle each driver can fuel, which fuel grade each vehicle can use, and when each vehicle can fuel depending upon the day, week, and time. These updates also occur in real time.
“Soft controls” or back-end controls, are based on proactive use of reporting to identify and isolate unauthorized purchases after the fact. An effective fleet fuel management system should have both types of controls.
Detailed, Auditable Reporting Delivers Fuel-Saving Statistics
Government fleet managers need to be able to quickly and easily view breakdowns of fueling expenditures by type, department, and subdepartment, and should expect exact dollar cost accounting to the unit level. The best fuel card systems provide real-time transaction tracking and reporting that is accessible online, 24 hours a day, seven days a week.
“Customers should ask for thorough fuel management reports which include complete fleet fueling data: date, time, site, vehicle, driver, odometer, miles per gallon, and cents per mile, product, volume, price, and excise tax details. The fleet industry refers to that as Level 3 data capture and reporting, on a scale of one to three,” says Mark Lavin, Senior Vice President, Fuelman Field Sales.
With a fuel card management system that generates reporting based on dependable, real-time data capture, the need for someone to gather and input all the necessary data is eliminated. If a fleet opts to use the fuel card for both fuel and maintenance purchases, drivers only have to deal with one card and all related transactions are integrated into one invoice or report.
Up-Front Tax Exemption Reduces Refund Filing
Government agencies may be tax exempt, but the system is set up in such a way that they must first pay fuel tax and then file for refunds. A time-saver to look for is a fleet fuel card programmed to electronically exempt authorized users from paying state and federal fuel taxes at the time of purchase, eliminating the administrative task of filing for related tax refunds.
The State of Utah must pay its State Excise Tax for fuel purchases made at retail locations. The fleet card program has been set up so that the state’s tax reimbursement comes through as a credit when billed by Fuelman. The up-front exemption makes filing for refunds unnecessary.
Programs Manage Entities’ Onsite Fuel Stations
Public entities operating onsite fueling stations (called “captive sites” in the fleet industry) can opt to manage them as part of a fuel card program.
Some fuel card providers can supply consigned fuel inventory for the entity’s onsite tanks, and customers pay for the fuel as it is dispensed using an automated card-reading system at the pump island. The fuel card provider would manage all aspects of captive site fuel inventory and usage, electronically monitoring to ensure tanks are always sufficiently stocked with fuel. Fleet drivers use the same card for retail fuel purchases and for their agency’s backyard pumps. The fleet manager benefits from real-time transaction tracking and integration of data and reporting. Multiple agencies or cost centers can be billed directly, eliminating the need for internal billing for fuel purchases at onsite tanks.
With the automated card-reading system, there is no need to staff onsite pumping stations or to shut them down after hours, leaving them accessible to authorized drivers whenever they need to fuel up.
Cost-Plus Pricing Cuts Administrative Tasks
Procurement managers can opt for cost-plus, auditable pricing for their fleet fueling needs. This is a feature that was designed to respond to government fleet bid specifications.
Lavin explains the concept of cost-plus pricing: “We take the wholesale fuel index, published by a recognized third-party provider of wholesale fuel information, and we make arrangements with our customers whereby whenever they purchase fuel using our fuel card they are always charged that base fuel price plus an agreed upon markup. This way, everyday fluctuations in retail fuel prices do not affect the government fleet manager’s budgeting and expenditures. Manager can count on an indexed price to wholesale regardless of the retail posting at the locations where their vehicles are fueled.”
Save with Savvy Fleet Fuel Management
Fuel prices are volatile and on the rise, which has brought increased attention to government fueling budgets. Fuel price increases generate questions from the public and stakeholders including, How will this latest price increase impact the city, county and state agency budgets? What are public agencies doing to control their fueling costs?
Finding the right fleet fuel card program can help a government fleet demonstrate to their constituents they are taking every reasonable measure to reduce the amount of fuel purchased and accounting for every gallon of this costly commodity.
Editor’s Note
For information on the Fuelman Fleet Card Program, visit: www.govinfo.bz/5966-305.
Cards Capture Level 3 Data
The fleet industry generally segments data capture in three levels. A standard Level 3 data capture includes:
Standard Detail:
- Purchase amount
- Transaction Date
- Merchant Category Code
- Vendor name, city, state, zip
Line Item Detail:
- Fuel service type
- Fuel product code
- Fuel unit price
- Fuel unit of measure
- Fuel quantity
- Fuel retail amount
Verifiable, Authorization Prompting Detail including driver-entered data such as:
- Odometer reading
- Vehicle / ID number
- Driver / ID number
