Know Your Numbers: Fuel

Introduction

Fuel is what drives landscapers, snow removal operators, lawn care companies, tree service businesses, and just about every other contractor business in the world. We use it not only in our work trucks but many pieces of equipment in order to perform our jobs as efficiently as possible. While it isn't usually the largest controllable expense (that is almost always labor), it is one of the bigger ones. Yet we as the company owners are often times very relaxed on control measures when it comes to fuel. Let's explore some of these control measures and other aspects of fuel usage in your landscaping company.

Controls

The first step is to set some controls over your fuel usage. The most common way to do this is to use a fleet fuel card. There are many providers of these cards such as Wex, Fuelman, Fleetcards USA and others that will allow you not only to charge fuel but also have control measures built in. With Wex, we were able to restrict which gas stations the card could be used at, what employees could use the cards, and receive alerts of suspicious transactions. Rather than having a card for each Crew Leader to get fuel, we had a card for each truck. The cards were assigned to the truck (not the crew) and stayed in the trucks at all times. Then each Crew Leader got a Driver PIN that would have to be entered at the pump along with the mileage of the truck when they fueled up. This should create responsibility for the fuel transactions, but it relied on the Crew Leaders not sharing their Driver PINs with others. To prevent this, we had them sign a document stating they would not share their PIN and if their PIN was used for a fraudulent reason, it was their responsibility. This removed the excuse of a driver giving their PIN to a Crew Member to fuel up, that Crew Member using the PIN to steal gas, and the Crew Leader getting blamed.

Another control WEX provided was a monthly statement that had detailed reporting on the purchases. Some of the data provided was the gas station location, how many gallons of fuel was purchased, the date, the time, the Driver PIN used, the card used, the mileage entered, the cost per gallon, and the total. However, these controls are not foolproof and can be skirted around, as I learned the hard way.

Monitoring Usage

The most important step in controlling your fuel usage is to monitor regularly. At one point in my business I got so busy with other parts of the business, I stopped monitoring my fuel. In this time, 3 Crew Leaders began filling up their personal vehicles on my company fuel cards. They got away with it for months before I caught on. It ended up costing me over $10,000 in fuel I paid for but didn't use.

Had I checked my statement from Wex more consistently, I would have liked caught this in the first month or two. The scam these guys were running was when they got back to the shop, they would take the card from their truck, go to the closest gas station they could use the card at in their personal vehicle, and fuel up. They were even brazen enough to use their own Driver PIN and would falsify the mileage to look like the fuel was going into a truck.

The way I caught them is that I finally went back to studying my Wex statements one month. I noticed a fuel transaction that occurred late in the night and didn't think a crew had been out that late. So I pulled up the timesheets and sure enough they were back at the shop an hour before. I then pulled my truck's GPS history and it also showed the truck back at the shop an hour before this transaction.

My first thought was doubt that my employees would do this to me. So I took the Wex statement and went to this gas station. I talked to the manager and asked for them to pull the transaction receipt to verify the date and time. I knew that sometimes technology has a lag and thought they must have fueled up an hour before as they were coming back and the pump or Wex had a 1 hour lag in recording the transaction. The manager offered to look over the security footage, she asked what my truck looked like and went to the back. 15 minutes later she returned and said she didn't see my truck anywhere in that timeframe but she found who used the card. She shows me a picture of my head Crew Leader, clear as day, fueling up his car at that exact date and time.

A simple review and study of your fuel transactions on a regular basis is likely your best defense against fuel theft or misuse. While the controls methods are good, anyone who wants to steal will find a way around them. I often hear that locks only keep honest people out of an area, but if a thief wants in they'll find a way. The same it true for control methods so monitoring your fuel statements would be the equivalent of having security cameras looking over this locked area. You won't be able to prevent theft from happening, but you can at least mitigate it.

Benchmark

Another way to monitor your fuel usage is through benchmarking. Benchmarking is simply comparing data to another set of data. There are a few ways to benchmark your fuel. The first is against industry averages. According to a TaskEasy blog, the industry average for fuel usage is 2-7% of your revenue. So for every $100 you take in, you spend $2-$7 in fuel. Now that is quite a range and it is going to vary on several factors. These factors include the cost of fuel, how dense your route is, and the fuel economy of your vehicles. But if you are outside of this range or even on the high end, it can be an indicator that you need to review your fuel usage. It may not necessarily represent fuel theft, but perhaps your crews are going off route often for pitstops, idling the trucks or equipment excessively, or driving aggressively which is lowering your MPGs. Some policy updates and training could fix these issues fairly easily.

Another way to benchmark is against yourself. Pull your P&L for last year and see what your fuel as a percent of revenue was. If it was 4% last year and you are at 7% this year, it is worth investigating. But you will have to keep in mind that there are factors that can make these numbers change that are not theft. This could be an increase in the cost per gallon of fuel versus last year, an expansion in business has simply led to more fuel usage, or the purchase of less fuel efficient vehicles or equipment. If this is not the case though and everything is fairly apples to apples, then it is likely time to investigate deeper and possibly there is theft occurring.

Wrapping Up

As we've discussed, there are several ways to fight fuel theft and to control your fuel numbers. The biggest takeaway I hope you have from this article is that it is going to require you or a manager to monitor fuel regularly. After the theft incident we had, we started reviewing our online Wex statement weekly when we ran payroll to try to catch any thefts or other issues quickly. So go ahead and get a fleet fuel card, setup your controls, and create a process to monitor your fuel usage often and regularly.