Ask the Fuel Expert

I used to cringe every spring when our Chief Accountant sent around the note advising me that it was “that time of year again.” I’m not talking about tax time, but time to plan the annual operations budget. Before resource management software came along we had to wade through a paper jungle just to get a ballpark estimate. Reports, notes, revise and re-revise, then repeat with the revised revisions that came in from all the other regions. And after finally receiving them, they had to be sorted, grouped and entered onto a single spreadsheet for all to read. Remember those days? Are you still living them?

Fortunately this process has been digitally streamlined to make our lives a lot easier – all except for one major capital cost – fuel – the second highest operating cost for businesses in transport and construction. Fuel costs continue to require yesterday’s hunting and gathering approach because there’s simply been no software or application to make fuel budgeting and forecasting as easy. None until now, that is.

Dan Jennings is a chief financial officer and a Chartered Accountant with over 20 years of experience around the world with truck fleets and business management. “A fully integrated, online system that centralizes all my fuel expenses isn’t just a boost to users, it’s a giant leap to a whole new level of cost-control, budget analysis and reporting.”

Jennings was involved in the development of an online fuel accounting system called Fuel Management Online (FMO). As the CFO of 4Refuel, a leading company in the fuel management business, the FMO developers sought Jennings’ input when designing the new capabilities of FMO to get a true financial user’s perspective.

“What we’d identified was a total lack of technology to help companies manage, track, budget and forecast fuel consumption.” He compares fuel expenses to the cost of labour. “For most companies that use fuel to do business, it’s the second largest expense next to labour. When managing your labour costs there’s plenty of payroll software available to help measure, forecast and manage the effects that labour costs have on the bottom line. Outside of FMO, there is simply nothing like this for fuel.”

Entirely web-based, FMO has been attracting a growing following in the past few years because it provides users with detailed fuel consumption reports and operating data. It’s able to collect and store a variety of useful information through a data transponder about the size of a dollar coin that is attached to each piece of equipment. It provides details like hourly and daily fuel usage, individual or grouped equipment consumption, operating consumption for time period specified by you etc., and delivers it as reports to your secure online account or directly to your desktop via email. The reports can also be exported from FMO in a number of formats so that the data can be easily imported to any accounting software.

Enhanced FMO now eliminates the “Hunting & Gathering” part of budgeting fuel.

In the past, CFOs have relied on admin staff, purchasers or fleet managers from outside of their office, to report the information that makes it possible to calculate and project their fuel expenditure. With FMO, instead of hunting and gathering all of the different reports on trucks, equipment and other vehicle’s consumption from staff for each individual region, it’s automatically gathered and displayed as reports in one single place. These reports are the valuable tools number-crunchers use to calculate a real return on investment for each litre of fuel consumed and ultimately the profitability of each unit. Equipped with this accurate and easy to access information, budgeting and forecasting fuel expenditures is easy.

You can save one to two and a half hours of administrative time for each piece of equipment, every month, just using FMO.

Jennings adds, “With the new enhanced FMO, what used to be a tedious and time consuming task is now actually very quick and painless. One of our clients literally used a stop watch to add up the time it took to gather the fuel consumption data they needed to accurately budget and forecast. They discovered that it took one to two and a half hours per piece of equipment, each month.

Fuel Management Online eliminates that time and with a single glance you can monitor volumes by unit, cost and performance. Clients can use FMO every day and know immediately if there’s a deviation from their planned level of consumption. Any variations to the forecasts are automatically flagged for analysis, making it possible to identify where the fuel went. Was it lost due to poor operating habits, a maintenance issue, or theft? This kind of tool really helps keep ops budgets and expenses in balance” concludes Jennings.

Jack Lee
4Refuel Inc.
President/CEO