Given today’s ever-fluctuating fuel prices and the money that can be saved through tax exemption, it is crucial to implement an automated fuel management system for your fleet if you haven’t already done so. At the swipe of a plastic card or the turn of a key, fleet managers can monitor all government fuel purchases and receive price/tax breaks, saving thousands of dollars annually.
A good fuel management program should also consist of real-time fueling transactions and a diverse fueling network of Level 3 data. Getting started is easy. Several fuel management providers are available, including Wright Express (WEX), Comdata, and Computerized Fleet Analysis (CFA) Software. Weigh your options, research the accessible features of each, and decide which provider best suits your government fleet’s interests.
The State of Montana Uses WEX
A 28-year veteran, Tom Gustin, program officer in charge of the State of Montana’s fleet card, purchasing card, and energy procurement programs, based in Helena, runs the state’s intergovernmental fueling program, comprised of 330 government agency accounts and 9,600 vehicles.
The state’s fleets consist of the Department of Transportation, motorpools, county road and sheriff departments, and municipalities. Providing fleet managers with the tools to save money by closely monitoring government fuel expenses, Gustin has been working with Wright Express for 5 1/2 years.
Using a WEX universal fleet card, every state vehicle, including political subdivisions, is eligible to participate in the program and can refuel at almost any service station in the state with tax-exempt service reporting.
Each transaction is centralized so that fleet managers receive one bill for the account depicting the date, time, location, driver, quantity and price of fuel, cost per gallon, cents per mile, and non-fuel products. If desired, fleet managers can place program restrictions, including regular fuel-only purchases, maintenance, and number of transactions per day.
Because of today’s volatility in fuel prices, Gustin helps provide opportunities to cut costs. For instance, the WEX Index and Daily Best Fuel Prices, which illustrate locations of cheaper fuel, are distributed to fleet managers.
“We’re trying to privatize government fueling in Montana as much as possible because of the expense of owning and operating tanks and the exposure to liability,” says Gustin. “So we find it much more efficient to fuel in the private sector.” Since switching to WEX in 1999, Gustin says the state has experienced a 45 percent growth attributed to ease of use, centralized reporting, and ability of fleet managers to control purchases.
According to Gustin, WEX processed 5 million gallons of fuel for the state in fiscal-year 2004. “We chose Wright Express because of its universal acceptance and robust online product so that accounts can be managed easily.” But perhaps one of the greatest benefits of using a fuel management program, says Gustin, especially with government fleets, is the opportunity for tax exemptions. [PAGEBREAK]
Comdata and the Indiana DOT
A reimbursement system, made possible through an alliance between Comdata, based in Brentwood, Tenn., and TransMontaigne, of Denver, Colo., has allowed the Indiana Department of Transportation (INDOT) to save approximately 24.4 cents per gallon on diesel fuel and 18.3 cents per gallon on gasoline, or $500,000 per year, according to Jack Hohman, administrative manager, Operations Support Division, INDOT.
Benefits include real-time processing of fueling transactions and tax exemptions, increased potential for cost savings and opportunities for cost management, customization of accounting, flexible pricing, a diverse fueling network of Level 3 data, network management, and paperless, Web-enabled data. Here’s how it works.
Comdata issues a Comdata Mastercard Corporate Fleet Card to designated government employees at either a driver or vehicle level. Each time a fuel transaction occurs, information is transmitted to TransMontaigne, a fuel-supply chain-management company that extends credit to INDOT, while Comdata electronically sends funds to the retailer where the fuel was purchased. The station operator is paid full pump price minus transaction fees.
INDOT is billed at the price level negotiated with TransMontaigne, without federal taxes. Invoices with transaction detail are processed within a few days of receipt. TransMontaigne then submits the refund claim. The tax-exempt Comdata/TransMontaigne system provides employees access to a vast retail network using one credit card, allowing INDOT to receive one bill. Electronic data flows from TransMontaigne into Indiana’s fleet management system, eliminating hours of work hand-entering tickets and allowing Indiana to receive a full refund.
“The IRS now recognizes us as a qualified wholesaler for fuel tax refunds because, in partnership with Comdata, we issue the credit, process the transaction, and bear any potential loss on behalf of our customers,” says Rick Eaton, senior vice president of marketing and logistics, TransMontaigne. “No paperwork is involved, so the result is a greater, more comprehensive procurement network that allows technology to drive costs out of the supply chain.”
Because of losses in fuel-cost management, INDOT sought help. According to Hohman, only Comdata had the appropriate process in place and was fully functional. A card program was implemented in phases. It began as a “pilot” in October 2001, with about 45 cards issued. By December, the program was rolled out to all employees as INDOT closed direct accounts with several oil companies.
Eventually, most gas stations in Indiana wanted to continue doing business with INDOT, therefore they upgraded to Level 3. Those stations and truck stops that hadn’t conducted business with INDOT before, now wanted the business, according to Hohman. An advantage to the Level 3 reporting is a simplified billing process.
“Transactions are broken down by district, stations used, the driver’s name, type of fuel purchased, date, and price. So, if the driver is not doing what he’s supposed to, we have his name,” says Hohman. Individual cards are enabled for data tracking so INDOT has access to individual employee/vehicle data.
Weekly transaction reports are transmitted via the Internet and allow INDOT to manage vehicle maintenance and monitor the use or misuse of cards. Exception reports have proved to be an effective way of keeping tabs on government transactions and monitoring everything from multiple daily usages, use of diesel versus unleaded fuel, after-hours purchases, and fuel grade. [PAGEBREAK]
The Town of Wellesley Uses CFA Software
With 400 total vehicles between 10 divisions, including schools, fire, police, water, engineering, and recycling, the Town of Wellesley, Mass., chose CFA as its fuel management provider and receives federal tax exemptions.
Unlike many other cities, Wellesley has its own electric, pavement, and construction companies, and water districts, so that all work is performed in-house. The town also buys 10,000-15,000 gallons of bulk gasoline and diesel per order.
Through CFA and Gasboy, a supplementary system for dispensing, controlling, and managing fuel, employees of the Town of Wellesley use a key to dispense fuel. Information, including driver’s name, social security number, mileage, vin, date and time, type of fuel, grade, gallons pumped, miles per gallon, etc., is collected from Gasboy and sent to CFA’s system. According to Jim Amatucci, fleet supervisor for the Town of Wellesley, maintenance, inventory, and parts are charged through CFA, which provides the town with monthly reporting.
“We’ve looked at several systems and they come nowhere near to giving us as much as CFA does,” says Amatucci. “They give us just about everything we want, in fact, they give us more than what we really need. We’re not utilizing everything.”
Fuel card abuse is prevented because the user must punch in his or her social security number and odometer reading and have a key that corresponds to the employee’s particular vehicle, says Amatucci. CFA supplies preventive maintenance reminders after each fueling. In case of emergency, police officers are the town’s only employees who can override the system.
In addition, CFA allows fleet managers to set certain parameters restricting premium-grade fuel, amount of fuel purchased, non-fuel purchases, and weekend fill-ups. Instead of sending a single bill for all charges, a funded amount of money for maintenance is budgeted per year.
“If you get rough snow seasons then extra money goes into the budget,” says Amatucci.
In Summary
The benefits to installing a fuel management program into your government fleet are simple. Fleet managers can save a bundle through tax exemptions and gain access to a diverse network of Level 3 reporting. In addition, several restrictions, including fuel-only and fuel grade, can be placed on purchases. Many programs feature real-time processing of fueling transactions and the flexibility of viewing reports online. Consider your options if you don’t already have a fuel management program in place.
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