Is Your Fuel Tank Leaking Profits?

iStock_000001603485_Small.jpgWhen it comes to finding the most cost-effective way to fuel their fleets, many companies choose to put a bulk fuel tank on their property.

With this choice comes challenges, such as paying to insure the tanks, and meeting environmental regulations. But these are obstacles that companies can overcome with careful planning.

Buying and installing a bulk fuel can be costly, but your company can also realize substantial net savings compared to alternative fleet fueling options…assuming your tank doesn’t “leak.”

We’re not talking about a physical leak, with fuel seeping into the ground. In this case, leaking means a tank without a fully-integrated inventory tracking process, including a card reader.

Without a tracking system, it will be impossible to tell where fuel is going when it leaves the tank. Misuse or theft can go undetected, and that fuel loss will quickly erase any cost advantage you gained by installing the tank in the first place.

Let’s look at four scenarios for inventory control, and why they do or don’t work:

  1. Worst Case Scenario: No Control

Anyone in the yard can drive up to the tank and dispense fuel, without any way of tracking the driver or their vehicle.

  1. Slightly Better Scenario: The Clipboard

This is really the least you can do in terms of inventory control, at least by today’s standards. In this scenario, you’d place a clipboard and pen near the tank – in a weatherproof location – that allowed people to document their fueling activity.

This system might work, assuming everyone followed the rules, the clipboard never got misplaced, and your office staff had the time to rekey all the information from the clipboard. Also, everyone writing on the clipboard would need A+ penmanship to make sure no data got lost in translation. In other words, this system only works if everything goes exactly according to plan.

  1. An Even Better Scenario: A Card Reader

In this scenario, you’d have a tank with a card reader system. The trouble here is that we often see companies with outdated equipment that can’t transmit information. Fueling transaction data stays on the reader until someone downloads it. If the reader’s memory fills up, we’re back to the worst-case scenario, with no information getting logged.

  1. The Best Scenario: Real Time Data

The preferred solution to logging fuel transactions is to outfit your tank with a card reader that provides real time data, either through a wired or wireless connection. This data should be in a format that is easy to integrate with an inventory control system that has robust reporting, possibly using the company’s G/L system for full cost accounting and P&L tracking. These capabilities are basic features for modern card readers.

If the cost of installing a modern card reader system worries you, remember that there are major fleet fuel card providers who are willing to absorb most of the cost – including installation – in exchange for earning transaction fees over an extended period.

This kind of arrangement can be very enticing for companies with limited capital expenditure budgets. Eliminating the need to spend cash up front can help quickly provide financial returns from improving your inventory controls.

If your business is considering ways to cut fuel costs, contact Sokolis Group. We’ve spend the last 13 years helping fleet managers around the country save more than $500 million on fuel purchases.

Whether you’re a Fortune 500 company or a family-run firm, Sokolis Group’s fuel management professionals can negotiate with dealers to find the best pricing, identify the effectiveness of your fuel card program, and determine which fuel purchase methods – bulk, mobile, retail over-the-road – is right for you. If there’s a “leak” in your fueling program, Sokolis Group can help plug it.