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Finding the Best Fuel Card Billing Cycle for Your Fleet

[fa icon="calendar"] Jun 7, 2018 9:38:00 AM / by Piper Bloom

Fleet Fuel Card Reports

When it comes to picking a fuel card, the effects of billing cycles on your company’s operations are often overlooked. Naturally, the focus of research tends to be on discounts, locations, and controls, but your accounting team will thank you for finding the best solution for your company. To help you make this decision, we’ve outlined the pros and cons of the two different industry practices for billing customers.

 

Monthly Invoice Cycles

You are likely familiar with this form of billing, as it is also used by credit card companies. Every month at around the same time, you will receive a statement showing the charges for your fleet and have 22 days to pay the balance. Sounds simple enough, right?

However, just like a credit card, this can lead to some major challenges down the line. Have you ever had to book a last-minute flight to deal with a family emergency, only to find that you’ve hit your credit limit? The same thing happens when dealing with monthly statements. Many small businesses have a low credit limit that requires them to prepay part of their invoice every month just to continue using their fuel cards.

Prepaying without an invoice creates more work for your company’s accounts payable department, as they will have to accrue for the expense and possibly receive approval from a high-level manager since they have not received an invoice yet. Additionally, in order to avoid exceeding your credit limit, you may have to initiate a last-minute ACH or wire payment, incurring fees from your bank. Given the possible frustrations of a monthly billing process, be sure to connect with your accounting team as you search for the right option.

Pros:  If your credit limit allows for a single payment for an entire month’s fuel, then you have fewer invoices to review and payments to process.

Cons: If you hit your credit limit early, you will have to prepay without an invoice. You won’t be able to see any issues with your bill prior to paying. Also, making a payment without an invoice can complicate your internal accounting process.

 

Invoice Cycles Matched to Credit Limits

Given the complications mentioned above, most companies prefer to work with statements or invoices that are tailored to their credit limits. P-Fleet believes that these invoice cycles are a better solution for most fleets because it allows you to stay on top of your invoices and monitor for misuse in a timely manner. Dealing with suspect purchases a month after they occurred can be difficult for the manager and driver alike, but shorter billing cycles allow you to consistently review your transactions for issues with drivers or errors.

In addition, invoices or statements that are in line with credit limits simplify the approval and payment processes for most accounting departments. The invoice is a natural reminder to review, approve and make a payment. Accounting departments will always have an invoice when making a payment, eliminating the need for prepaid expenses and simplifying any reconciliation.

Pros: Allows you to stay on top of your invoices and monitor for misuse; avoid hitting credit limit. You always have an invoice to enter into your accounting system before generating the payment, simplifying your accounting process.

 

Conclusion

Though locations, discounts, and controls are important factors as you deliberate which program to use, also take time to confer with your accounting team to see which billing cycle setup is best for you. P-Fleet has found that most companies prefer statements that match their credit limits, so ensure that your fuel card company offers this ability.

 

Click here for our comprehensive fuel card comparison!

 Topic: Fleet Fuel Cards

 

Piper Bloom

Written by Piper Bloom

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