An average small business in the U.K. operates a fleet of at least three vehicles, according to a new report from FuelGenie. More than likely, those businesses are missing out on major cost savings at the fuel pump.
According to FuelGenie research released last week, SMEs need to take a closer look at their fuel card strategies.
Fleet is now commonplace for nearly every industry. Researchers found the usual suspects when it comes to industries that most commonly rely on fleet, and therefore use corporate cash for fuel spend: transport, wholesale distribution and retail. But motor services, plumbing and construction — industries where professionals are working out in the field and traveling from place to place — are also on top of the list, the report said.
Nearly a third of companies that operate fleets of at least three vehicles said they are using traditional processes by which drivers pay and then submit reimbursement forms to the companies. This means loads of paper, and limited spend tracking and analysis. According to FuelGenie analysis, the businesses that use this pay-and-reclaim system are overall spending more when they reimburse their employees for their expenses, as well as through spending more on wages for employees that are taking the time to file these expense reports instead of doing their jobs.
There are easy ways companies can save money, though.
Analysts found small businesses would save an average of 3 percent on monthly fleet fuel spending if they begin using more supermarket forecourts, for example.
“As a rule, people tend to buy fuel from the most convenient place and not necessarily the cheapest,” said FuelGenie Managing Director Robert Pieczka in a statement. “So, by making the simple switch to supermarket fuel stations, businesses could make a saving on their monthly fuel bills.”
FuelGenie added that the seemingly minimal savings figure of 3 percent a month on fuel expenses can add up to thousands of dollars saved every year. For an SME struggling with narrow margins and inconsistent cash flow, that is precious money saved.
The firm’s finding that so many SMEs are stuck using manual fuel payment processes may be a tough hurdle to overcome, but separate analysis suggests not every corporation is lagging so far behind when it comes to fleet management and payments.
According to new data released this month, Internet of Things technology is taking off in the fleet space, with IoT in fleet expected to see a 21.26 percent CAGR by 2021, hitting a market value of an impressive $8.28 billion. While at first glance IoT technology appears to only impact how fleet managers gain visibility into the physical location and state of fleet vehicles, the financial impact of IoT can be significant.
According to analysts, IoT technology can help businesses reduce maintenance costs, for instance. Further, virtual fuel card technologies are also gaining traction and landing on streamlined IoT platforms, offering fleet managers a single view of their fleets that can assess vehicle maintenance, driver performance and spend management and analytics.
Fuel cards, too, are gaining traction in the industry. According to Radiant Insights research released earlier this year, use of fleet cards in the U.K. is on the rise, with volume expected to increase by 11.3 percent between 2016 and 2021. More than 156,000 new fuel cards are expected to be issued in those coming years, the report found.
But for the significant portion of U.K. SMEs with fleets that continue to rely on manual expense reporting processes, the ability to track and analyze driver spend on fuel and other purchases is out of reach. That means being able to identify how to save money — like requiring drivers to use more affordable supermarket forecourts, as identified by FuelGenie — is unattainable, too, unless they ditch the paper and adopt digital payments, IoT platforms and other technologies transforming the fleet industry.