Should Small Business Owners Consider Fleet Cards? An In-Depth Guide

As a small business owner, you have no shortage of financial decisions to make when it comes to managing your company‘s vehicles. One option you may hear about are fleet cards – specialized fueling and maintenance cards designed with the needs of business fleets in mind. But are they right for your small business?

This comprehensive guide examines fleet cards from the small business owner perspective. It covers:

  • What fleet cards are and how they work
  • The specific benefits fleet cards offer
  • Potential drawbacks to consider
  • Guidance on factors to evaluate when deciding if fleet cards make sense

By the end, you‘ll have the information you need to determine if fleet cards deserve a place in your business.

What Are Fleet Cards and How Do They Work?

Fleet cards function similarly to credit cards, but are tailored for managing expenses related to company vehicles. Employees use the cards to pay for fuel, maintenance, repairs and other approved purchases like oil changes or car washes.

The system captures detailed transaction data – not just the cost, but the driver ID, vehicle, merchant location, odometer reading, fuel type and quantity. This information feeds into online reporting systems that business owners can access on demand.

Many fleet cards provide more control and customization than typical expense cards. You specify where, when, and how much employees can spend. Alerts notify you of suspicious out-of-policy charges. You restrict card usage to only business-related purchases.

This combination of enhanced data, control and convenience explains why over 50% of commercial card spending now goes through fleet card programs. Over 8 million fleet cards are in circulation in the US alone.

The Benefits Fleet Cards Offer

Fleet cards provide several compelling advantages that address pain points faced by many small business owners:

1. Detailed visibility into vehicle expenses

The granular data fleet cards capture facilitates insights not possible otherwise. With a few clicks, you can analyze average MPG across vehicles to identify maintenance issues or upgrade needs. If fuel costs suddenly spike, you can pinpoint the cause – for example, a driver taking an inefficient route.

Jen, office manager at a local plumbing company, says their fleet card reporting helped uncover $100s in excess spending:

"We realized one employee was fueling up their truck once a week when it should only need gas every 3 weeks. We were able to re-route their service calls for better efficiency".

2. Improved protection against fraud

Unfortunately, some employees do abuse company cards for personal purchases. Fleet cards allow you to set customized controls tailored to your acceptable use policy – like limiting to certain merchants, maximum dollar amounts or number of transactions per day.

Sophisticated authorization systems also recognize suspicious out-of-pattern behavior indicative of potential misuse. Instant alerts let you take immediate action, such as temporarily blocking the card or denying the charge.

Across industries, businesses report fleet card fraud rates around just 0.02% thanks to robust security capabilities reducing misuse opportunities.

3. Lower fuel & maintenance costs

Between discounts of 1-5% off the retail pump price and loyalty rewards programs for high volume purchases, most fleet cards provide meaningful cost savings that quickly offset small monthly card fees.

Some fleet cards even enable you to lock in wholesale fuel rates for a set period – shielding your budget from market price fluctuations.

Maintenance discounts are also common. For example, the FleetCor Comdata program offers 25% off all repairs and services at over 800 Goodyear tire centers nationwide.

4. Streamlined administration

Processing and paying a single monthly fleet card invoice is vastly simpler than managing piles of receipts and expense reports from employees purchasing out of pocket.

Built-in sales tax remittance procedures on qualified purchases also alleviate accounting headaches. Come tax season, comprehensive fleet card transaction reports speed up vehicle-related deductions and documentation.

5. Value-added fleet management tools

Many modern fleet cards integrate Value-added fleet management tools or partner with other providers to enable additional capabilities through the same system like:

  • GPS fleet tracking
  • Electronic vehicle inspection checklists
  • Custom telematics reporting on vehicle diagnostics
  • Driver safety monitoring
  • Electronic logging for Hours of Service compliance

While opt-in, these extras simplify managing fleet operations on the go with powerful mobile apps.

Potential Downsides to Consider

Of course no solution is one-size-fits all. Fleet cards aren‘t immune from disadvantages, including:

Upfront transition costs – Between setup fees, card costs and employee training, expect an upfront investment of $200 to $500 to launch a program. Ongoing costs like monthly card fees and software subscriptions can add up as well.

Learning curve – There may be an adjustment period. The online platforms and reports take some training to leverage to their full potential. Some employees accustomed to paper processes may resist change.

Spotty acceptance – While fleet cards usually use MasterCard or major fuel networks for widespread merchant acceptance, there still may be ocassional small locations that don‘t. Drivers should carry a backup.

Potential downtime – A disrupted payment network or technology glitch could temporarily leave drivers without a working payment card until systems are restored.

Fraud still possible – No solution eliminates all fraud risk. While robust, determined employees could still circumvent controls. Fleet card limits may inhibit legitimate purchases needed in unexpected situations. Some monitoring remains vital.

So while powerful tools for businesses managing fleet vehicles, fleet cards aren‘t a silver bullet solving every problem. Some downsides persist.

Key Criteria for Evaluating Fleet Card Fit

Given these pros and cons – how do you determine if implementing fleet cards would benefit your small business?

The value depends significantly on your current situation and priorities. As you evaluate options, consider these criteria:

Fleet scale – The more company vehicles you operate, the greater potential for efficiency gains and negotiating power with providers. Managing 1-5 vehicles presents limitations. But 10+ unlocks greater possibilities.

Total monthly fuel volumes – Bulk discounts kick in at different thresholds – perhaps 500-1,000 gallons monthly. If your fleet burns less, savings may underwhelm.

Expense management friction – More employees, vehicles and transactions complicates oversight. Existing processes breaking under complexity indicates need. Smooth operations may not justify change.

Fraud/misuse risks – Do employees frequently drive long distances alone? Have past cases of questionable charges occurred? Strict supervision necessitates controls cards enable. Trustworthy teams likely require less oversight.

Operational insights needed – Fast-paced operations often lack fuel economy visibility needed to optimize routing efficiency. Direct fleet oversight a priority? Then telematics integration and custom analytics provides value.

Weighing considerations like these against the specifics of your business provides the best guidance on whether fleet cards warrant further exploration. The use cases and benefits are clear for some owners – but uncertain for others with different contexts.

The Final Word

Fleet cards offer small business owners a powerful toolkit for streamlining fuel and fleet expenses companywide – but aren‘t a universally ideal choice. As with any business decision, context matters.

Carefully evaluate if the cards align with your specific pain points and priorities. If your fleet scale justifies bulk fuel discounts and you crave better oversight – fleet cards merit consideration. Just entering the market? You may table the capabilities until your needs mature.

Regardless of where you land – I hope this guide better equips you to make the fleet management technology decision optimized for your small business. Please reach out with any other questions!