Daily global demand for crude oil and biofuels topped 102.21 million barrels in 2023.
Just imagining the total cost has our jaws on the floor! And corporate businesses that own multiple vehicles or require their employees to travel by car for business would want to reduce fuel expenditure.
Enter fuel or gas cards, which can be directly handed over to the drivers to save travel costs. But how do fuel cards reduce spending? Read on to know.
What Are Fuel Cards And How Do They Work?
Simply put, fuel cards or gas cards are used by companies to allow employees to purchase fuel or gas with the company’s money.
The global fuel card market is experiencing significant growth, with its size surpassing $615 billion in 2023. This upward trend is projected to continue, reaching an estimated value of $2.6 trillion by 2033, driven by a compound annual growth rate of 15.54% during this period. So, it is the right time for companies to benefit from the fuel cards.
Companies can choose from different types of fuel cards, which include:
1. Branded Gas Station Cards
Although most gas cards can be used at any gas station, some cards can only be used at stations belonging to a particular chain.
2. Region-Specific Cards
These cards facilitate fuel purchases in only a specific state or region. This is a good option for companies who don’t require employees to travel interstate very frequently.
3. “Credit” Fuel Cards
Credit fuel cards work just like credit cards- they have a borrowing (or spending) limit and charge interest which can change over time.
4. Prepaid Fuel Cards
Companies can fund prepaid fuel cards with a certain amount of money as required as well as cap the spending limit. Furthermore, they don’t have to pay extra interest charges.
How Can Corporates Reduce Spending With Fuel Cards?
1. They Can Plan Cost-Effective Travel Plans
Many companies review their fuel card purchase reports monthly, which also often contain odometer readings. Hence, they can have a clear understanding of the mileage and its fuel cost. As a result, they can plan cost-effective travel plans like deciding on alternate routes that are faster to cut down on fuel costs.
This is especially important if your company offers trucking services, as you’d always want to reduce the fuel costs of a truck. Just ensure that the truckers note down the correct odometer readings, especially for longer journeys.
Plus, many fleet gas cards offer discounts on the cash prices of both petroleum and diesel, thereby saving more money.
2. They Can Prevent Unnecessary Purchases
One of the biggest problems with corporate debit or credit cards is that companies can’t really monitor their spending. As a result, employees may end up overspending, either for buying things related to the business or for personal expenses.
However, a gas card provides the management with an effective tool to stop unnecessary spending.
For instance, if your employees need to travel only a few times a week or month for business, then the fuel cards issued should facilitate only one-time fuel purchases for a said period. Likewise, you may opt for cards that only allow fuel purchases and not other services like car washing or maintenance.
3. They Can Earn Loyalty Points
Some fleet fuel cards offer loyalty point programs, awarding points for gas purchase or any related service like car maintenance (if applicable). And these points are usually awarded over and above the discounts, meaning you can redeem them for subsequent purchases to avail hefty discounts. Likewise, the purchases can earn you free services or goodies, which will always be welcome!
4. They Can Get Better Security And Ease Of Expense Tracking
Fuel cards, albeit susceptible to theft, can’t be used without entering the correct PIN, thereby reducing the chances of theft and fraud. Moreover, by tracking the expenses on the card, companies can detect fraudulent transactions faster, as they don’t have to wait for the receipts to be submitted.
These cards are connected to the main company account, which can be tracked via a virtual dashboard anytime as long as you have access to it. This way, the management can rest assured that at least the fuel expenses, no matter how big or small, are recorded accurately every time.
5. They Can Set Usage Limits and Alerts
A key feature of many modern fuel cards in 2024 is the ability to set spending limits and receive alerts when those limits are approached or exceeded. This not only curbs excessive fuel spending but also allows managers to address potential misuse or inefficiencies immediately. For example, if a vehicle is using more fuel than expected for a certain route, corrective actions can be taken swiftly, improving overall cost management.
What Are Some Of The Other Benefits Of Fuel Cards?
1. They Save Time
If your employees travel for business frequently every week or month, then it could lead to hundreds of fuel purchase receipts being submitted to the accounts. And reimbursing them can take a lot of time, which can be annoying for the employees.
Alternatively, some companies may need employees to get a “fuel budget” approved before traveling, or they may be asked to fill up reimbursement forms. Not only can both these processes be time-consuming, but they also promote fraud, as there’s no way to verify the details. However, fuel cards reduce these possibilities to a great extent.
2. They Can Be Used By Businesses Of All Sizes
Cost-saving isn’t specific to business size, so there’s no reason why all business organizations that need their employees to travel shouldn’t get these cards. The best part is there are multiple providers offering the card features you need; hence, you can easily find the most cost-effective deal.
3. They Can Be Disabled
Companies that don’t need their employees to travel regularly can simply disable them when not in use. Additionally, real-time tracking allows the management to see if any employee is spending more on fuel than others traveling the same distance. And in such cases, the card can be deactivated with just a click of a button on the account dashboard.
4. Better Purchase Control
Fuel cards aren’t directly connected to your company’s bank account, so there’s no way employees can use them to withdraw money. Moreover, with stringent purchase control measures, you can authorize only certain purchases for effective and convenient expense management.
However, you should ensure that customizing them doesn’t make you break the bank. Some fuel card providers may charge a regular usage fee, which can come across as adding to the expenditure. But it’s a really small price to pay for the benefits and discounts that you can gain.
5. Enhanced Data Analytics for Fuel Consumption Patterns
Fuel cards now come with advanced data analytics tools, allowing companies to analyze fuel consumption trends, compare vehicle efficiency, and optimize fleet management. This data can be invaluable for identifying cost-saving opportunities, such as selecting more fuel-efficient vehicles, optimizing routes, or reducing idling times. It gives businesses a more strategic approach to fuel management, driving down long-term expenses.
