Benefits of using a fuel card for your business

If you’re running a fleet of vehicles then fuel costs will be a major part of your regular expenses. One way to manage these costs is to sign up for a fuel card – a payment card that functions in a similar way to a business credit card.

Let’s take a look at the benefits of using a fuel card, how they work and the key ways they differ from a traditional credit card or business banking card.

What is a fuel card and how does it work for businesses?

A fuel card is a business-specific payment card that’s used by your employees and directors to pay for fuel and a limited range of other motoring services.

Most fuel cards operate on a straightforward credit basis. You and your team use the card(s) to buy fuel, and the business will then receive a single, consolidated invoice (often weekly) for all transactions across your fleet. 

You then pay this invoice by direct debit, typically after a short credit period. So, in essence, a payment card functions in a similar way to any business line of credit.

Differences between fuel cards and regular business credit cards

Although similar in function to a credit card, the way a fuel card functions is different in some important ways.

Here are the key differences:

• Supply comes from the fuel card provider: When you use a fuel card, the fuel is supplied from the garage to the card company and then by the card company to the cardholders. With a credit card, the garage supplies fuel to the cardholders, the credit card being used simply as a means of payment.
• Specific usage: Fuel cards are restricted to fuel and specific vehicle expenses, which makes it easier to control spending. Business credit cards allow general purchases, with less control over individual transaction types.
• Cost savings: Fuel cards often provide fixed weekly prices and discounts on pump prices, which helps you to cut your fuel costs and spending. Typically, credit cards don’t offer fuel-specific discounts.
• Reporting and admin: Fuel cards provide consolidated invoices that are compliant with His Majesty’s Revenue & Customs (HMRC) processes for reclaiming VAT. You also get detailed fleet reports with breakdowns of spending. Credit cards require you to collect your receipts and input all the data when making a VAT claim, and also offer less detailed fuel insights.
• Interest: Most fuel cards offer interest-free credit for a short period until the consolidated invoice is paid. Business credit cards have high interest rates and can work up significant interest if not paid off promptly.
• Security and fraud: Fuel cards offer enhanced security with usage limits (for example, fuel type, volume) and PINs to reduce the risk of misuse. Credit cards have broader spending capabilities, which increase the fraud risk if lost.
• Chip and PIN or magnetic strip: Some fuel cards still use a magnetic strip to store the card information, rather than the more secure chips found in most credit cards. However, newer fuel cards are moving towards using the Chip and PIN technology.

How fuel cards simplify expense tracking and reporting

Having a centralised digital system for managing your fuel spending gives you a complete overview of fuel and motoring costs, across the whole business. 

• Automatic data capture: Transactions made with your fuel cards are automatically logged. This eliminates the need for drivers to manually record purchases or for your finance team to manually input data from receipts.
• Better oversight of your fuel spending: The regular HMRC-compliant invoices from your fuel card provider give you complete oversight of all fuel spending, broken down by team members, departments, divisions etc.
• Limits on team spending: You can easily set spending limits per card, allowing you to control cash outflows on petrol spending and regulate how much your team can spend within a given period. This helps to manage cash flow.
• Offers a line of credit: Fuel cards provide your business with a line of credit, allowing you to purchase fuel and pay off the costs when each invoice is received. This helps to spread the costs and boost cash flow.

Discover the benefits of using a fuel card for small businesses

If you’re running a fleet of cars, electric delivery trucks or other business-related vehicles, using fuel cards can streamline the whole process of paying for fuel. 

Let’s look at some of the major benefits of fuel cards: 

1. Reduced fuel costs through discounts and stable pricing

When your fuel card provider offers pump discounts and fixed weekly prices for fuel, this can help to cut your overall spending on diesel and sometimes petrol. Fixed prices also protect you from any volatility in the fuel market, as prices peak and dip. 

2. Easier financial management and cash flow planning

Discounts and fixed prices provide you with predictable costs, allowing you to budget carefully and reduce your overall fuel expenditure. In turn, this reduces your fuel-related cash outflows, making it easier to balance your cash flow. 

3. Better expense tracking and reduced admin time

The automated data collection, regular digital invoices and fuel reporting benefits of a fuel card all make it easier to get proper oversight of your fuel expenses. You can spot trends and patterns, and take proactive action to manage spending. 

4. Improved security and fraud protection compared to cash

Most fuel card providers offer online portals where you can manage your cards and, if necessary, stop or cancel a card. If a staff member loses their fuel card, you can quickly cancel the card and order replacement, reducing the fraud risk. 

Comparing the best fuel card providers in the UK

There are a range of fuel cards available on the UK market, with most of the big fuel companies offering their own version of a fuel card service.

Here’s a rundown of the leading options for fuel cards, with a comparison chart to allow you to make an informed decision over which card is best for your company.

1. Shell Card

The Shell Card is a fuel card that makes it easy to pay for a range of products, including traditional fuels, electric vehicle (EV) charging and monitoring expenses. 

You can use the card across over 1,100 UK Shell service stations and over 2,500 partner networks, including Esso, Texaco and Gulf. For EV users, you have access to Shell Recharge, with over 9,000 Shell-operated charge points and over 40,000 EV charge points from Shell’s partner networks.

The card doesn’t charge interest, like a standard credit card, helping to reduce costs. You also have access to Shell Fleet Hub, an online hub to manage fuel costs across your fleet, with additional tools around fraud and security services. Users can enjoy 4p per litre off V-Power & 3p per litre off standard fuels at Shell, plus fixed weekly prices on diesel fuel for trucks and delivery vehicles. 

Shell also has the Shell Fuel App for SMEs with fuel services tailored specifically to the needs of small and medium-sized businesses (SMEs).

2. bp Fuel & Charge Card

bp has a wide range of different fuel cards, with options for overseas fuel spending and large haulage and logistics solutions. 

The bp Fuel & Charge Card card offers traditional fuel purchases at around 1,200 bp sites and an additional 2,300 partner sites, including Texaco, Gulf and Esso. You get a 4p per litre discount off the pump price at all bp branded stations, paying the pump price and receiving the discount in your regular fleet invoice

The card also offers EV charging across the bp network of over 51,000 charging points, and fixed weekly prices on diesel and sometimes petrol.

bp online Account Manager allows you to run reports and manage the spending on all your bp cards, across your fleet. 

3. Esso fuel card

Esso has one of the fastest growing networks of traditional fuel stations and offers both the Esso Card National for UK fuel usage and the Esso Card Europe for making fuel payments on the continent. 

The Esso Card National gives you access to a network of 1,250 Esso service stations, plus access to participating Shell and bp service stations too. This makes Esso the biggest network for petrol and diesel. Fixed weekly prices are offered for diesel, but no pump discounts are currently being advertised. 

Esso does have an expanding network of EV charging points, but EV payments are not included through the Esso Card National.

Account management for the Esso card is carried out through EssoCardOnline portal, where you can run fuel reports and access breakdowns of spending. 

Let’s look at how the top fuel cards compare:

What is the best fuel card for a small business in the UK?

If you’re using both internal combustion engine (ICE) vehicles and EVs, the Shell Card or bp Fuel & Charge Card are both good options to consider. 

bp has a slightly bigger EV partner charging network (51,000 total charging points), if you’re using a large number of EVs for business purposes.

If you want the biggest petrol and diesel network, the Esso National Card is a great option, offering an overall network of 3,500 UK service stations. 

Choose the right fuel card based on your business needs

It’s important to opt for a fuel card that meets the needs and circumstances of your business. This will help you achieve the best possible balance between network size, price discounts and other considerations like card fees. 

For example: 

• Fuel volume and locations of stations: Think about how much fuel you’re likely to use and how well serviced you would be in the locations where you usually travel. There’s no point getting a Shell Card if there are no Shell service stations on your usual driving routes.
• Type of fuel/energy: Consider which fuel type your fleet uses and where you’re likely to get the best coverage or discounts. If you have a diesel fleet, fixed weekly prices can be a major bonus. And if you’re expanding into electric vehicles, payments for EV charging would be convenient to have.
• National or international: Look at whether the majority of your travel is regional, national or international. If you’re running a logistics business that trades with the continent, the Esso Card Europe, or other international fuel cards, would make more sense than a purely UK-based card. 
• Weigh up the discounts and benefits: Do your research into available pump discounts and loyalty rewards schemes. If you can reduce costs, or generate rewards points, this can help to manage your fuel spending across the whole company. 

Avoid hidden fees and understand fuel card terms

Many fuel cards will charge a regular account service charge for the use of the card, whether weekly, monthly or quarterly. There’s also likely to be an annual charge, per card, for using all fuel cards across the business. 

You’ll also be faced with transaction fees, account closure fees and charges for replacing any lost or stolen cards. 

Key terms and conditions: 

Make sure you’ve read the terms and conditions (T&Cs) and you’re aware of the ongoing and annual fees, the terms around usage and any hidden fees, such as minimum usage charges. 

Reading the small print:

Always ask for a full breakdown of the contract, T&Cs and any potential fees before signing any contract. This allows you to make an informed decision on whether to apply for the card, and keeps you aware of the terms of using the card. 

Improve cash flow and budgeting with fuel cards

The reporting and expense management benefits of using fuel cards shouldn’t be underestimated. Having a full breakdown of all transactions and spending trends is invaluable when it comes to cash flow management. 

For example:

• The weekly or monthly billing cycle of fuel cards makes it easier to see your fuel expenditure, know the underlying costs and manage your cash flow.
• Detailed reporting helps you budget more accurately, based on historic spending behaviour and forecasts for the coming period. 
• Integrating fuel cards with your accounting software adds the additional benefits of automated reconciliation and matching of spending. 

Is it easy to apply for a business fuel card?

Applying for a fuel card is similar to applying for any line of credit. You’ll need to supply information about your business, directors and vehicles as well as information about your business performance and financial health.

Providers are likely to check if you have a good business credit score and will assess whether your risk profile will allow you to repay any credit offered.

Using business finance to support fuel card expenses

Fuel costs can be a major expense. The amount you spend will depend on the industry you trade in and the size of your business fleet, but there may be instances where you need a cash injection to help you manage these fuel expenses.

In these circumstances, access to short-term small business loans can be a lifeline for your cash flow, giving you the liquidity you need to pay your fuel bill. 

For example;

• Additional funding can be used to manage any initial cash flow gaps when setting up your fleet expenses.
• Extra capital could be used to provide funding for a pre-paid fuel card. Pre-paid fuel cards, like the RightPay card, don’t offer credit but can be topped up with cash to provide cashflow for your fleet’s fuel expenses.
• Flexible business loans, like an iwoca Flex-Loan, can be used to cover upfront fleet expenses or fuel costs, helping you to manage your fleet expenses.
• Fast and straightforward access to extra funding is vital for smoothing out your  operational costs and freeing up the capital needed to grow the business.

Can I get a fuel card for a new or small business?

Yes, there are fuel cards tailored to the needs of SMEs, startups and smaller businesses. The important consideration is your risk profile, business credit score and your forecast business revenue and performance. 

If fuel card providers can review your business information and see proof that you’re a low-risk borrower, they’ll be happy to offer you a fuel card. 

If credit isn’t available, pre-paid fuel cards are a good alternative. 

iwoca: the simple way to fund your fleet expenses

Fuel expenses can be unpredictable, making it difficult to budget effectively. If you’ve got a fuel bill to pay and a hole in your cash flow, we’re here to help.

An iwoca Flexi-Loan can be in your business bank account in a matter of hours, giving you the cash you need to cover your fleet expenses.

• Borrow from £1,000 to £1 million
• Terms from 1 day to 60 months
• No early repayment fees

Apply for an iwoca Flexi-Loan

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