Fuel cards: real or imaginary savings on fuel purchases
Fleet cards are widespread among private motorists and companies. They simplify calculations, allow controlling expenses. The main reason of their popularity lies in economical efficiency. According to some reports, it is possible to save up to 30% on gasoline or diesel with their help. Is it really so?
Manipulation of discounts on the market of fuel cards.
Experts say that there is no free money on the fuel market! The maximum discount offered by an honest gas station is no more than 5%. If the percentage of savings is higher, there is a catch.
Most often gas stations overestimate the cost of fuel in the final invoice. An imaginary cash price is used, to which a notorious discount is added. It turns out to be much higher than the real one. This scheme is most widely used in remote regions among small businesses where there are difficulties with verification.
Some companies do give great discounts. They look up the lower boundaries of prices and set their own – less by a few cents. This allows them to attract customers, turning them into loyal customers. By putting customers on their guard, they quickly return the original cost, which turns out to be higher than that of their competitors. Some firms raise prices almost immediately, others after a couple of months. Suffer from such machinations not only local but also foreign clients.
Caution should be maintained for new customers of gas stations. To start using the fuel card in most cases they have to agree to prepay terms. Moreover, a minimum balance must be kept. This is money that is frozen for a few days in the customer’s account. That is, initially you have to pay at least 0.6% more for a fuel card.
Geography is not always fully capable of meeting the user’s requirements. There are gas stations that offer a discount that applies only to certain gas stations located in the vicinity of major population centers. In other regions this discount may be half as much or none at all, and the prices are shamelessly inflated.
Some firms offer participation in loyalty programs. The customer has to regularly buy fuel at network gas stations in order to earn bonus points. The benefit here is minuscule. The average driver can save up for a full tank of gasoline in a year of continuous cooperation.
The quality of the fuel becomes an excellent excuse for manipulating discounts. In Russia it is allowed to produce fuel according to specifications. This makes it possible to reduce costs by using an individual formulation. But the prices of quality gasoline or diesel are used to calculate the discount. In fact, reducing the cost by 15-30% makes it possible to sell fuel at its real price. Ordinary gas station customers are unlikely to know what kind of fuel a car is filling up with. It will not be difficult to unmask the swindlers. In the name of the materials, produced according to technical conditions, they add prefixes.
Why you should not trust the guaranteed quality
Some firms, often processors, mislead customers. Having no fuel of their own, with only computer programs and access to personal card terminals, they promise flawless product quality. A favorite marketing ploy is regular inspections. Allegedly there are representatives at every gas station, and their competence includes getting fuel samples for inspection.
It is impossible to do so, especially if terminals are installed at hundreds of gas stations within tens of thousands of kilometers. The company will have to bear huge expenses on buying test equipment and paying for the labor of controllers.
How not to become a player in games with discounts.
In order not to suffer from fraudulent discounts on fuel cards you need to carefully analyze the situation. Do not be guided solely by advertising slogans when choosing a company. You need to pay attention to the prices displayed on the invoice. To obtain the most reliable information, it is important to be able to see the cost before sending the car for a trip. Some companies publish the data on their websites.
It should be remembered that because of the high competition in the market, customers will be lured away, offering exceptional conditions of cooperation. But you do not know what the situation will be in one or more months, six months or a year.
In order to compare the conditions offered it is reasonable to use two fuel cards. If the carrier has a large number of vehicles in its fleet, it is possible to allocate one type of card for half of them and the other for the remaining part. By comparing the average cost figures of both groups, it is realistic to pick the best options. In addition, the figures obtained should be compared with earlier expenditures.
Why is there a markup on Gazprom Neft and no discounts at all
Gas station networks of major oil companies, including Gazprom Neft, make fuel prices for corporate customers paying with fuel cards extremely unprofitable. Due to an increase in the price of fuel on the market they are unable to keep discounts. The latter are reduced or cancelled altogether. In order to compensate for the losses caused by a sharp increase in the cost of purchases, the company introduces the so-called “service charges”. The latter raise the price of diesel fuel by 5% on average and petrol by 1%.
“Gazprom Neft was the first company to announce the introduction of extra fees for fuel cards. Clients found out about them by receiving the appropriate notifications. Company employees say that the changes in the conditions of card sales have been planned for a long time. This was caused by the need for substantial expenses for the development of service offers. In other words, the service fees will be spent on processing services.
Experts believe that the introduction of additional fees is nothing more than an effective way to bypass “frozen” retail prices. In order not to trade with minimum profitability and not to incur losses independent gas stations come up with charges for maintenance of fuel cards customers.
Is a VAT refund also a discount?
Some oil companies and gas stations operate with the possibility of VAT refund when selling fuel cards, presenting it as a discount. But in fact it is just another marketing ploy. The refund is not a discount. It is a refund of overpaid taxes from the budget.
When a company buys fuel, it has to pay a special fiscal burden. It represents a surcharge on the actual price of fuel. Both legal entities and individual entrepreneurs who use the general system of taxation, special regimes UTII, USN, UST, SAT, STS become taxpayers of the mentioned fee.
In the process of selling goods the encumbrance is included in the total cost. It can be reimbursed in full amount if the documents are prepared correctly and the corresponding application is filed. The availability of the fuel card simplifies this procedure due to the ease of collecting “proof”. Every month the supplier supplies the company with an invoice, fuel acceptance and transfer act, bill of lading, and a summary of card transactions.
Cost optimization or marketing
A standard fuel card is a chipped payment means. It contains information on limits, volume and type of fuel purchased, related services – washing, installation, etc. Many companies say that replacing cash with it, you can literally cut your expenses by up to 10% in the first month. It depends on the total volume of consumption and other factors.
Indeed, the head of a company with a large fleet after the introduction of the fuel card can control his employees by checking the information through a personal account. The latter subconsciously become more disciplined and responsible, realizing they have access to complete information on the purchase and use of fuel. The fact of control stops most drivers from dumping diesel or gasoline, using cars for personal use outside of working hours. It simplifies the work of managers and accounting department. Spending is optimized by setting daily or monthly limits, limits on the list of purchased goods and services.
If several years ago there was a risk of losing card data, nowadays the technology eliminates it. A personal identifier is encrypted in the microchip, and an individual unique serial number is recorded. The name of the company, vehicle number, name of the owner can be displayed here. The high standards exclude the risk of forgery and prevent the use of the card by unauthorized persons or on terms different from those previously accepted. The fuel cards are issued either by big manufacturers or by processing companies. There is a rational reason for their use. There is also savings. But one cannot say that one can reduce expenses by 10% on card management. Here everything depends on the integrity of workers, the logistics.
But for the purchase, maintenance, renewal of cards, you have to spend extra money. Routes have to be planned taking into account the location of gas stations. No one card covers all the locations of the chain. Nor is there a hundred-percent guarantee of high quality fuel. In practice promises of savings do not come true to the fullest extent. Sometimes the costs not only are not reduced, but on the contrary are increased.
What is a fuel card and how to use it
Today a fuel card is a multifunctional and handy tool for business. Modern fuel cards for legal entities and individual entrepreneurs practically do not differ from bank cards in fact and appearance. Each card has its own unique number, the issuing company which issued and services the card, and the card balance.
The card is standardized in appearance and size for ease of use, and for security it uses an electronic chip with several degrees of protection on it stores information about the card limits.
What does a fuel card provide?
First of all it is security and control of company finances, if your company still uses cash when paying for fuel. Firstly issuing cash from the company requires additional accounting documents, which complicates the flow of documents. Secondly, the driver needs to carry cash, and this creates additional risks. Third is a check for fuel, of course, they need to keep them and the driver and an accountant to keep track of them manually. Not to mention the fact that almost at every parking lot you can buy a fake check for fuel, and fill the car with low-quality surrogate under the table. As a fourth consequence is the possibility of money misuse or theft.
A fuel card will provide security of money, no more cash. The company has a common balance for fuel, and each card has a certain limit – either in rubles or liters. This limit is the limit of the amount of fuel the driver can get, that is why it is very difficult to “cash out” the fuel card.
All transactions by fuel cards are shown in personal office in online mode, and if the operation seems doubtful you can immediately block the card.
All the information about the transactions is available electronically, which helps quickly transfer them to the accounting systems, which greatly speeds up and simplifies the work with the accounting. The rest of the advantages and features of the fuel card “Full Tank” will be discussed further.
Many businessmen, company managers and fleet managers ask themselves the question: “Should I get a fuel card?
At this point, there are no real alternatives to the fuel card for businesses. This article has already talked about the advantage of a fuel card over paying in cash – if you are looking for additional benefits and want to better control costs, the answer is, of course, “Yes.”
Of course there are also mobile applications to pay for fuel, but they have a very small reception network, depend on signal strength and internet availability on the mobile device, no discounts, minimal service and customer support.
Therefore, in our opinion it is necessary to make out the fuel card for the legal entities and it does not matter what volume of your organization’s fuel consumption is 100 liters or 10 000 liters – the card will pay off in any case.
What is the main benefit from using fuel cards? In saving on fuel!
If your company works with VAT, you can get a tax deduction, which is 20% of the cost of purchased fuel. The second opportunity to save money is a huge network of accepting the fuel card “Full Tank” – more than 12 000 gas stations. And this means the ability to choose the supplier with the lowest price. According to our data the difference for the same type of fuel is more than 4 rubles per liter, which is about 10% savings. Also, a large network allows you to fill up at almost any gas station, which eliminates the risk of overshooting in search of points of acceptance card. A personal account, a system of limits, reporting and the possibility to instantly block fuel cards for legal entities and individual entrepreneurs give an additional 5-7% savings due to more efficient management and control. As a result with a fuel card you can save from 10-35% per month on your fuel costs.
How do fuel cards work?
The principle behind fuel cards is very simple – it’s a cashless payment for fuel. The amount of fuel that you can get with the card is determined by the limit set on it. These limits are set in personal cabinet and can always be changed (reduced or increased). The card holder, at any petrol station that is part of the acceptance network, using a terminal or a cashier can fill up the vehicle by the amount of fuel within the limit. After refueling, the transaction will be reflected in the personal cabinet, indicating: petrol station where the operation was carried out, type, volume and cost of fuel. In accounting documents a corresponding entry will be made that will allow you to add the purchase of fuel and lubricants to the balance.
Types of fuel cards
There are quite a lot of fuel cards, especially for physical persons, but this article will describe two main types of fuel cards for legal entities.
The first type is a branded card, sometimes called a mono-branded card. Such cards allow the card holder to fill up at any gas station that belongs to the company that issued the card, such fuel cards can include: “Rosneft”, “Lukoil”, “Gazpromneft”, “Shell” and others. Of course these are well known and trustworthy global brands, but the card holder is limited to only one network and has to accept the company’s price policy unconditionally, for instance the markup on certain types of fuel.
The second type – universal or multi-brand, just such cards include “Full Tank”. With their help you can fill almost any gas station, including famous brands, get an additional discount on fuel and not depend on one supplier, and choose an effective combination of price and quality.
Advantages of the fuel card
Earlier in this article the main advantages of the fuel card “Full tank” were discussed, for your convenience they are gathered in one place: 1. Saving on fuel expenses from 15% to 35% – due to 20% VAT tax deduction, wide choice of fuel suppliers with minimum price and the system of card consumption limits; 2. Large fuel card acceptance network “Full tank”, more than 12 000 filling stations, including top brands – more than 78 regions of Russia and CIS countries, the best and proven suppliers: “Rosneft”, “Lukoil”, “Gazpromneft”, “Tatneft”, “Shell”, “Bashneft”, “Surgutneftegas”, “TNK-BP” and many others; 3. Modern services – personal account, mobile application, petrol station locator, EDI, personal manager, 24/7 support, accounting reports, SMS messages and API integration; 4. Online control and management – instant information update in personal cabinet, full and transparent reporting on all transactions, blocking and unblocking cards in minutes; 5. Discounts for fuel – 1₽ from each liter on the petrol station network with the highest consumption; 6. Deferred payment up to 30 days – for reliable and trustworthy clients we provide overdraft for up to one month, it’s important to us that your business works; 7. Automation of accounting – electronic document management, electronic statements, transaction reports in table format, API integration; 8. Refusal from cash payments – reducing the risk of theft and misuse of funds, increasing business transparency and simplification of business processes.
How to choose a fuel card?
In most cases to determine which card to choose, you need to answer two questions: the region (s) where the largest number of filling sessions and preferences for gas station brand, for example: “Rosneft”, “Lukoil”, “Gazpromneft”, etc.
If you plan to refuel in several regions and have no desire to depend on one network/supplier, it is better to choose the fuel card “Full tank”.
There is no objective rating for fuel cards; each has its pros and cons. So when choosing a fuel card you need to consider the features it gives you. If you have difficulty making a choice book a free consultation, our managers will contact you to answer all your questions and choose the most efficient solution.
How to issue a Fleet Card?
It is easy to get a Full Tank Fuel Card for legal entities or individual entrepreneurs. Fill in the application form, call us free on 8-800-550-09-14 or write to firstname.lastname@example.org. We will discuss details of the contract with you, ask for details of your organization, fill out the contract and send it to you for approval. After signing the contract we will send the cards to your office and in 3 days you can start refueling and receive all the benefits of using the fuel cards “Full tank”. The whole process of concluding and approving the contract takes no more than 15 minutes, and the convenience and benefits will be with you during the whole period of use.