By Ryan Mossman, vice president and general manager of FuelQuest’s Fuel Services.
Fuel invoicing accuracy has been a challenge in the industry for quite some time. The levels of inaccuracies (anywhere from 10-25% or more) that exist in fuel invoicing would be considered unthinkable in most other industries. Of course, the majority of inaccuracies are due to the amount and complexity of variables, such as constantly changing and often complicated fuel tax rates, high volatility in fuel prices, and transportation and delivery costs. Historically, fleet-based businesses have not displayed significant concern over invoicing errors, despite fuel typically being the second highest operating expense.
However, new data and industry events imply that this mindset is changing. Recent press highlighting fuel invoicing scandals, such as the prosecution of a national travel center chain for fuel rebate fraud, have served to heighten this concern. Additionally, a recent survey conducted by FuelQuest adds further proof: 40% of fleet-based businesses polled believe they are receiving fuel invoices with inaccuracies, and 25% state they are changing the way they manage and review fuel invoices. In fact, 38% indicated they plan to implement a new solution to combat the issue.
The issue of fuel invoicing inaccuracies is not isolated to fleet-based businesses of course, as retailers are prone to the same errors. One could argue that retailers are even more exposed to these errors, given that their overall business depends on fuel and margins from its sale. FuelQuest has witnessed invoicing error/failure rates related to retailers as high as 55% when a customer is brought on board. However, with processes, controls and open communication, that error rate is brought down to roughly 10%. FuelQuest has also seen a customer receive an invoice meant for another organization from a common supplier. This further illustrates the need for retailers to be in control of their fuel invoicing. The best way to combat this issue is with a combination of processes and technology. To make it simple, there are three basic steps an organization should take to get on the right path with regards to invoicing.
Step 1 – Establish an Invoice Verification Process
This process should include a few essential elements such as establishing an owner for each data segment of the invoice, and ensuring that those who are familiar with the invoice element in question are the ones looking at it. Independent source data is also important to help verify pricing received from suppliers (some examples include Argus, OPIS and Platts). Lastly, your process should include goals and metrics. As a result, you will have a clear picture of the impact that you are having on the accuracy of your invoices.
Step 2 – Build a Change Management Process
A change management process is necessary to manage the changes that will be created when errors are found in your invoices. Without this process in place, you could be creating more work for your organization without fully realizing the benefit of that work. Part of this process should include parameters to handle simple and complex changes in a different way. In other words, make it easy to make simple changes and put more process in place for the complex changes where it’s needed. For example, a complex change or new process will require extra approval layers to manage properly. Testing of these processes is also key.
Step 3 – Automate the Reconciliation Process
The final step in your process should be the automation of one or more of your processes. This makes it easier to manage and provides a better ROI. Some issues that are ideal to automate include capturing BOL data from the terminal, and using available third party software or services designed for this function.
While the goal of reducing discrepancies to zero is still unattainable due to the factors mentioned previously, effective technologies and processes can bring the discrepancy rate down to a more manageable 10 percent. Following these steps will get an organization well on its way to being fully in control of their invoicing process, making sure that you are paying the right price for your fuel, freight and applicable taxes.
Ryan Mossman, vice president and general manager of FuelQuest’s Fuel Services, leverages his years of experience applying technology and business process improvements to help energy, retail, commercial and industrial clients. In addition to overseeing a team that manages ~$2.4 billion in fuel, Ryan’s FuelQuest experience includes leading large-scale supply chain optimization, technology, and business process implementations at large fleet and energy companies including UPS and Chevron.