Whether he’s in the office, driving a truck or at his home, Hurricane Express President Ian Fenburg keeps a close eye on his fleet’s spending by using a Pocket PC handheld computer and wireless Internet connection. With just a few clicks, Fenburg can see if any drivers filled their tanks up yesterday in Cleveland, where fuel costs 10 cents more per gallon than in the 33-truck carrier’s hometown of Findlay, Ohio.
“I like to see what’s going on firsthand,” Fenburg says. In addition to reviewing purchases, Fenburg can log in to his Fleet One card management account to set controls on daily limits for fuel and maintenance purchases and authorize cash disbursements anytime, anywhere.
Fleet cards now are standard tools for carriers to track and control fuel and service expenses. And through online tools, managers like Fenburg monitor spending nearly in real time. But fleets have operating expenses far beyond fuel and over-the-road service. Electronic payment and purchasing technology can provide companywide cost control and visibility to activities that affect cash flow and profitability. They also have led to more efficient processes for purchasing by eliminating paper and the cost of using purchase orders, invoices and checks.
A central tool in most electronic purchasing solutions is preauthorization, which gives managers proactive control of spending as opposed to reactionary control. With electronic payment systems – or “fleet cards” from vendors such as Comdata, Fleet One and T-Chek – carriers can set predefined cash limits on transactions and restrict purchases by time of day, location and even product type.
“Without [preauthorization], you have no control over anything,” says Sonny Woodall of San Bernardino, Calif.-based Bear Trucking. Preauthorization allows Bear Trucking to set a daily limit on each driver’s fuel purchases and to limit all other daily purchases to no more than $10. Any non-fuel transactions that exceed $10 a day first must be approved by the office, says Woodall, general manager for the 120-truck carrier. If such a circumstance should arise, Woodall can adjust transaction limits or authorize a cash disbursement through Fleet One’s online service.
Despite having tight controls on spending through pre-authorization, it is not foolproof. Woodall downloads transaction data every week from Fleet One into a spreadsheet to review purchases and ensure that spending is kept within company policy. He calculates fuel mileage of each vehicle to determine if somebody has been selling fuel. “There are a lot of games that can be played,” he says. (For more on fuel theft, see “Pumping Away Profits,” CCJ, December 2003).
Today, fleet cards can extend the same level of control and visibility over driver spending to the financial activity of other employees and departments. About two years ago, Swift Transportation, the nation’s largest truckload carrier, began using Comdata’s new BusinessLink service to increase visibility, control and efficiency of purchases companywide. BusinessLink allows users to establish spending rules for transaction amounts and merchant (MCC code) for each card: One card can be set to allow a specific daily or weekly dollar amount of fuel purchases only, while a different card can be set to allow purchases only from a certain vendor of office supplies.
Currently, more than 300 individuals at Swift use BusinessLink cards, with users ranging from salespeople to employees in the IT, telecommunications and purchasing departments. Purchase limits on the cards range from hundreds to millions. “We pretty much customized it for each individual or department,” says Jeanne Ruth, Swift’s purchasing card manager.
A single platform
Electronic purchasing systems that enable compliance with spending policies also have another advantage: They use one platform for data reporting and payments. Companies can eliminate the hassle of reconciling multiple bills and issuing numerous payments for business expenses.
Con-Way Transportation buys millions of gallons of fuel each year, generating thousands of transactions for each of its 440 service centers in the United States and Canada. Some service centers have fueling stations on site, but generally drivers pump fuel at outside fuel stations. Until three years ago, its service centers were bombarded with receipts and invoices generated by fuel purchases.
“We had to approve and match [the invoices] up with hard receipts and send them into the general office,” says Al Zahn, Con-Way’s manager of process management. “We were touching paper five to six times before the information was input into the system. It was very labor-intensive.”
Three years ago, the company began using a fuel card program from Wright Express. Transactions are paid by Wright Express when a driver swipes his fuel card and enters his PIN and odometer reading. “We pay Wright Express just like we would pay any other credit card,” Zahn says. Transaction data is downloaded automatically into Con-Way’s fuel accounting program. Automating fuel purchases alone has saved the company approximately 70,000 manual invoice transactions a year.
Besides using one platform to pay vendors, carriers also can use fleet cards to automate driver settlements and payroll disbursements. For Tampa, Fla.-based Quality Carriers, cutting and signing checks is a relic of the past. Its drivers can purchase fuel and supplies, and get fast access to cash and driver settlements with almost zero administrative work for the company, says Keith Margelowsky, one of the carrier’s vice presidents.
Management sets the company’s T-Chek card system with pre-authorized daily and weekly amounts for fuel purchases, maintenance, additives and cash advances. As Quality Carriers’ drivers – 85 percent either are owner-operators or other contracted drivers – swipe their T-Chek cards at the pump or at the retail counter, the purchases are tallied against their personal file and automatically deducted from driver settlements. Quality Carriers uses software that integrates card data into accounting and payroll systems. Drivers can elect to have their settlements sent directly to their bank or to their T-Chek card.
Carriers can use a variety of paperless platforms for automatic capture, control and accounting of spending on items other than fuel and services. At Swift, employees using a BusinessLink MasterCard visit www.iConnectData.com to assign each purchase a general ledger code.
As a further level of security and to simplify accounting, Swift can set up the website to restrict what GL codes employees may use. At Swift, a manager is required to review a subordinate’s monthly report, sign off on it and mail in the receipts. Twice a month, Swift downloads an interface file into its general file, for automated entry of spending into its accounting system.
To further eliminate the paper flow, the company recently began scanning receipts at terminals to make reviewing and storage more efficient. Cardholders soon will be able to attach receipts to an online report, hit a button and send an e-mail to his manager for approval. Comdata’s BusinessLink has enabled Swift to eliminate three positions from its accounts payable department, she says.
“We had a tremendous amount of paperwork going through our AP organization,” Ruth says. “We’ve reduced processing there quite a bit.”
Besides card-based systems, electronic payment and purchasing systems come in other formats. For example, a fleet already using fleet cards for drivers and traveling employees may want a back-office solution to enforce corporate spending policies at all its branches or terminals.
“We had national accounts, but that didn’t keep us from maverick buying,” says Steve McSherry, chief financial officer of Penn Tank Lines. The 450-truck operation transports petroleum in more than 20 states with terminals in the northeast and southwest. “We set up guidelines, but until we received and approved an invoice, those items had already been purchased and were on the equipment. If they didn’t follow guidelines, we couldn’t prevent it.”
Two years ago, the Chester Springs, Pa.-based carrier began using a program from AmeriQuest Transportation and Logistics Resources for ordering equipment and supplies. The program uses a paperless, e-commerce system called Corcentric that has an invoice approval process.
Using Corcentric, Penn Tank Lines receives invoices electronically from suppliers via a web-based software system, as opposed to receiving them through the mail at local terminals and its corporate office. The company’s accounts payable supervisors can go online and review pending invoices, see when they are due, and approve invoices issued by other terminals for payment. Management can refute an invoice before it’s due by pushing a button on the screen, which initiates a follow-up process. Approved invoices are coded to a GL account and downloaded into the company’s accounting software.
“It allows us to have a homogenous buying plan,” says McSherry. “And we are buying smarter because we are buying the best product at the best price.”
Electronic payment processing systems come in different forms, but they all have a common goal: to increase efficiency in the spending process and allow businesses to keep a tight lid on cash flow. With the right technology, the “red tape” – control systems such as purchase orders, invoices and checks – doesn’t have to be in paper form.
Cardless systems eliminate theft, administration hassles
Based on his experience, Todd Staples believes fuel cards are outdated. The physical cards that many fleets hand out to drivers are subject to theft and misuse, and are a hassle to administer, says Staples, fuel manager for IWX Motor Freight. “I honestly believe that physical fuel cards are on the way out,” he says. “They are a very high-maintenance way of operating an over-the-road fuel program.”
For several years now, IWX Motor Freight has used a “cardless” system when purchasing fuel at Flying J truck stops. When a company driver is at the pump, he enters his company’s MC-ICC number, which is conveniently printed on the side of his truck, followed by his Social Security number. After the driver fuels, the transaction is processed through TCH, a financial services subsidiary of Flying J, and invoiced to IWX Motor Freight.
Staples visits TCH’s website to monitor fuel transactions for the previous day and then downloads the data into IWX Motor Freight’s AS/400 system for fuel-tax purposes. He can manage the fuel program from the company’s Innovative software system.
Vendors offer this type of “virtual card” for more than just fuel purchases. Wright Express offers its customers an optional “virtual card” – an 800 number that drivers can call to authorize a payment to a repair shop. A fleet customer can set up the parameters ahead of time – such as setting the amount limit and allowing the virtual card to be used once a year, says Gary Fragodt, Wright Express vice president of heavy truck sales.
Comdata offers a “virtual MasterCard” in its BusinessLink product. A maintenance supervisor can issue a MasterCard number to pay for an outside repair order. Instead of issuing a Comchek or purchase order for a repair, BusinessLink integrates with several fleet maintenance software systems to issue MasterCard numbers while a fleet creates a repair order in its system, says Bob Sneed, Comdata vice president of sales.