According to recent reports, the number of fuel cards in circulation has more than doubled as companies expect them to work magic on their fuel bills.
This has been partly driven by a desire to control fuel spend in the face of rising fuel prices, but also because of a likely EU Directive effectively outlawing the pay and reclaim system that is a favourite method of most employers.
The European Sixth Directive stops companies reclaiming VAT on fuel payments unless the purchase was by a VAT-registered company.
When a driver buys fuel privately and then claims back business mileage costs, either with a receipt or with a pence-per-mile reimbursement, the Directive says VAT can no longer be reclaimed.
But the rush to cards to control fuel spend and protect VAT reclaims has brought additional debate about what card drivers should be using.
Although fuel cards are the first port of call for many companies, corporate card suppliers are highlighting the wide-ranging benefits of their solution.
Among them is Royal Bank of Scotland, which offers Visa and Mastercard corporate cards.
Kevin Boyle, head of commercial card sales at the firm, said: ‘Rather than a company looking solely at the way it pays for fuel, this is the ideal stage to have a much wider review of its expenses policy.
‘The result could be a move to a fuel card, or a corporate card, but it is important to have a review.
‘There are a lot of unknowns and there is no definitive answer, which is why it is important that fleets take advice.’
Boyle, who previously worked at Dial Contracts and most recently CitiCapital Fleet as sales director, said that the choice companies make would come down to the complexity of their business.
For a large fleet, a fuel card may be the only option because of the management information it can provide.
By using a fuel card, fleet operators can gain information on pence-per-litre and miles-per-gallon on all fleet vehicles and drivers.
This procedure is not possible with a corporate credit card, which can only give details about location, price and time of fuel purchased.
But for many companies with less detailed requirements, simply using corporate cards along with a pay and reclaim system would be enough.
Certainly some large firms think so, with one client handing out 600 corporate cards to its drivers to replace fuel cards, because it fitted in with the way it operated its accounting system.
In addition, the card can be used for a much wider range of services, depending on what companies want to allow, while the Visa and Mastercard logos are accepted throughout the world.
Boyle, who joined RBS two years ago and is responsible for a team of 35 people, said: ‘We have access to sophisticated management information that means you can view spend in different categories, such as fuel or car rental, by cost centre or by supplier.
‘There is also the benefit of the size of the support team and the advanced development of chip and PIN technology.
‘Companies need to assess what they can do that benefits the driver, fleet manager and finance director.’
Corporate/purchasing: which one to choose?
THE world of business-to-business payments provides a vast range of choices for companies.
In general, employers have two payment choices covering a so-called corporate card and a purchasing card.
The corporate card can be seen as a basic company credit card, with all the benefits that brings, including consolidated billing and AirMiles-type rewards.
A purchasing card is slightly different, as it is VAT accredited by HM Revenue and Customs, so accounting procedures are simplified. VAT can be recorded and reclaimed without an invoice.
Royal Bank of Scotland has moved to streamline the choice for fleet managers with the OneCard, which aims to combine the benefits of the two systems.
So the Mastercard branded card can be used simply as a credit card, but there is also VAT accreditation on certain types of transactions.
In addition, there is a web-based management information service, called Smart Data On Line, through which fleets can create bespoke reports of spending.
Furthermore, there is travel insurance cover for the cardholder and up to three colleagues when travel costs are charged to the card.
Boyle said: ‘Drivers benefit because of the high acceptance levels that come with the Mastercard logo and the fleet manager has improved contracts with suppliers, as they can be paid more quickly.
‘In addition, the finance director frees up staff time, because invoices and processing requirements are reduced.
‘You don’t need to re-key details of transactions, as the data is already online thanks to Smart Data On Line and you consolidate your spending to one payment for b2b spend internally and externally.
‘It can be implemented for all companies that provide or receive services from the leasing, rental and fleet management sectors.’
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