The use of fuel cards is becoming increasingly popular as businesses recognise the many benefits that they offer.
Instead of paying for the cost of fuel using cash, credit or debit cards, employees can use a fuel card. The cards can be affiliated with a major fuel brand, or operate across specific fuel stations, such as supermarket forecourts.
Some fuel cards only allow drivers to refuel, but other types also cover certain vehicle costs, such as replacement tyres and windscreens, and even tolls on bridges and roads. Firstly, transactions are logged against the car, and businesses will then receive regular invoices in a format that is compliant with HMRC. The use of fuel cards frees business managers from the burden of collecting receipts and calculating VAT manually.
Fuel cards can be assigned to an individual vehicle or a specific driver. When the vehicle requires refuelling, the driver fills up at the pumps as usual. The fuel card is handed to the cashier who logs the transaction, just as they would with a credit card. The driver then inputs their PIN and sometimes a separate unit number too, as further verification.
The transaction is charged against the account that owns the fuel card. Invoices are issued to the business regularly, usually weekly or monthly, showing each purchase for that specific accounting period.
The main benefit of using fuel cards is the opportunity to purchase fuel at a discounted price. There is a wide choice of fuel cards available, and the majority give access to fuel prices that are cheaper than the price advertised at the pump and on the forecourt. The discount may only be a few pence per litre but over a year that can represent huge savings, particularly for companies operating a large fleet.
Employees appreciate fuel cards, as they enable them to fill up company vehicles without any need to use their own money. Claiming back expenses can be a long-winded and frustrating process, usually involving bundles of damaged receipts which tend to go astray. Lost receipts might leave your employees out of pocket, which in the long run could cause resentment.
Unlike credit cards, which can pay for various expenses, fuel cards tend to be exclusively for fuel and motoring expenses, so there’s no confusion as to the amounts spent and where. Invoices contain all the information that a business needs to complete its accounts, making light work of administrative tasks.
The majority of fuel cards come with controls that fleet managers can tailor according to the needs of the business. For example, it’s possible to set specific spending limits on each card issued, which significantly limits any potential for fraudulent use.
Additionally, the information displayed on the invoices allows business managers to assess the mileage and running costs of their vehicles with high accuracy. It’s also possible to identify drivers who could benefit from further training to encourage more efficient fuel consumption.
There are a variety of fuel cards available, some affiliated with particular fuel brands such as Shell and Esso and some giving access to supermarket forecourts, for example. The cards can also be associated with specific types of fuel. Businesses can choose diesel cards, petrol cards, or combination cards which allow access to all fuel types.
The use of fuel cards commenced in the UK in the early 1980s. Fuel cards were initially aimed exclusively at truck drivers, and the first network consisted of just seven fuel stations. The first fuel cards did not have electronic data strips until a few years’ later, at which point they became increasingly popular as fuel networks also expanded to offer nationwide coverage.
With the introduction of Chip and Pin technology, fuel cards really took hold. Fuel card issuers were able to buy fuel in bulk, bringing down the costs which they could then pass on to their customers. Not surprisingly, this made their use even more attractive to businesses. These days, there is a vast choice of fuel cards available, so most types of business can source one that fulfils their needs.
Businesses that own several vehicles may find that a fuel card can help to save time and money. In addition to providing businesses with HMRC-approved invoices, the data collected by fuel cards allows business managers to keep a close eye on the activities of their vehicles and their drivers to ensure optimum efficiency.
It is important to note that some companies may benefit from a more broad expense management card, such as a prepaid card. Soldo offers one of the best prepaid cards for business, providing a simplified solution to managing company-wide spending.
The main difference between Soldo prepaid cards and fuel cards is the ability to cover a far more extensive range of business expenses for employees. Managers can monitor and control employee spending in real-time, minimising the time spent on reporting and financial admin.