Fuel remains one of the most expensive operating costs for SMEs with a few vehicles. As a result, this makes it essential for SMEs to actively manage this expense to avoid it negatively impacting on profit margins.
Earlier this year, petrol prices in the country reached a record high, pushing the cost of fuel to R26.74, leaving small businesses with no choice but to absorb the increase.
Jesse Weinberg, Co-Head, SME at FNB says the tough economic environment including additional cost pressures such as load shedding and fuel price hikes, make it essential for SMEs to constantly review their cost cutting strategies and find creative ways to make their businesses more profitable.
“For fuel in particular, there are a number of strategies that SMEs with a few vehicles can consider, given the volatile nature and economic factors that impact fuel prices,” says Weinberg.
Maximising on loyalty and reward programmes – similar to how these programmes have been successful in providing some form of relief for consumers, SMEs have the potential to benefit even more considering the number of vehicles they may own, as well as fuel spend on a monthly basis.
For example, an FNB small business client with a few vehicles currently has the potential to earn up to R6 per litre back in eBucks for fuel purchases made at Engen. As a result, businesses can save just over 20% of their fuel spend with the difference invested back into their business.
“Importantly, all drivers should be trained and equipped to apply the correct earn rules when filling up, such as using their FNB Virtual Debit Cards when paying for fuel and other spend, as there is a higher eBucks earn on FNB Virtual Cards,” says Weinberg.
Vehicle maintenance – during tough economic times, some small businesses may opt to skip vehicle maintenance to cut costs. Although this may appear to work in the short-term, it has long-term financial and possible risk ramifications for the business; not only do poorly maintained vehicles often consume more fuel, but unforeseen vehicle breakdowns are expensive and can impact a business’ reputation by impairing its ability to deliver to customers.
Technology – SMEs should also consider investing in telematics that help monitor fuel usage as well as driving behaviour, such as speeding, which can result not only in possible fines, but also contribute to higher fuel bills.
SMEs should also consider using navigation apps and systems to avoid heavily congested routes which often result higher fuel consumption and delays. Navigators such as Google Maps and Waze have proven to save businesses money on fuel especially during load-shedding when traffic lights are out.
“Fuel remains a key expense for businesses which operate vehicles. As such, SMEs are encouraged to maximise on FNB eBucks fuel rewards to reduce the impact of fuel costs on their bottom line, especially in light of inflationary pressures such as the rising cost of goods and materials, electricity, and wages, amongst many others.
“Over the years, our fuel rewards with Engen have provided our customers and business clients with incredible value, and we are delighted to continually increase the impact of our rewards to clients who bank with us,” concludes Weinberg.