18 February 2022
How SMEs can reap the benefits of better fuel management.
Small and medium-sized enterprises (SMEs) account for 99.9% of the 5.6 million businesses in the UK, and employ more than 16 million people with an estimated turnover of £2.3 trillion.
Such a large group of businesses and employees have enormous purchasing power, and also the ability to effect change in the UK. Most notably, in the transition to electric and working- and driving - more sustainably and efficiently. But while running cleaner, more economic vehicles is desirable for many SMEs, the practicalities of doing it can seem onerous.
It’s a responsibility The Federation of Small Businesses (FSB) is well aware of, as Martin McTague National Vice Chair Policy and Advocacy, FSB says: “In the face of many competing priorities, taking action on sustainability has been a ‘nice to do’ challenge for small businesses, who often find themselves cash-, resource- and most importantly time-poor. Now, however, with increased levels of environmental awareness and the pressing need to reduce our impact on the environment before it’s too late, this is no longer a ‘nice to do’, but a ‘need to do’.”
So how can small businesses make their transport operations more efficient, without impacting on cashflow and creating a huge logistical and administrative burden?
A good option is to look at using fuel cards. Fuel cards might seem like the preserve of large fleets with thousands of drivers and vehicles, but the principles that apply to those businesses are just as relevant for SMEs, if not more so.
Digitisation, through apps and portals has made it easier than ever to set up a fuel card system for all your drivers, and here are some of the areas in which you could benefit:
Cost and efficiency
More than half of SMEs have experienced problems with cash flow, with businesses owed on average £31,055 at any one time according to research by Intuit QuickBooks. As a result, ensuring that daily operational costs are as low as possible will benefit the cash position and fuel cards can help with this, by allowing drivers to access discounts off the pump price, or through fixed weekly prices for commercial vehicle users.
Some fuel cards even provide controlled access to lower cost supermarket fuel, so that drivers use those sites rather than more expensive forecourts.
With the price of fuel increasing to a point where a litre of diesel averages nearly £1.50 in the UK*, equivalent to a 60-litre tank costing £90 to fill up, a 10% reduction through a scheme such as Allstar’s Discount Diesel can be a significant benefit for an SME across its vehicles, no matter how many it runs.
Also, by using fuel cards SMEs can gain access to analytics technology that might previously have been the preserve of big fleets with ample resources: Allstar offers a UK Fuel Price tool, providing up-to-date fuel prices from 90% of UK fuel sites so drivers can identify the best places to fill up near them, while Allstar Online’s bespoke fuel spend reporting lets you see exactly what is being spent on fuel, as well as where and when.
And fuel cards don’t just buy diesel and petrol too. A card such as Allstar One Electric allows you to pay for charging so you can start to transition to electric vehicles where and when it suits, while also running traditionally powered cars and vans at the same time.
*Price 149.3 ppl as at February 8,2021 via UK Fuel Prices
Control and convenience
The concern could be for many SMEs that the extra time and resource needed to instigate, integrate and operate fuel cards would end up costing more than the savings made, but the reporting and systems put in place can streamline paying for fuel and claiming back VAT and expenses.
Because fuel spend is recorded in one place online, fuel cards avoid the burden of managing expenditure, while simplifying administration too.
One area where this can be seen is with VAT reclaim. The FSB says that “small businesses do not have the dedicated tax teams and specialist knowledge available to large corporates and consequently they miss out on many reliefs. SMEs face a disproportionate compliance burden relative to turnover”.
Using a fuel card can relieve that burden and ensure that the business mileage VAT portion is fully recoverable. With one HMRC-compliant invoice, it makes the process far simpler and ensures nothing is missed.
Buying fuel this way also means that pay and reclaim is a thing of the past: you don’t need to chase employees up for paper receipts and claim forms, and then spend time tallying it up and then paying them back.
Online account management gives you control over where drivers buy fuel and limits expensive or unnecessary purchases, but also limits fraud too, by linking the card to a particular vehicle.
The consequence of using fuel cards and the associated technologies is that SMEs can act like big fleets – and make demonstrable savings and efficiencies too.