Fuel discounts at nationwide gas stations can lower fuel expenses and increase profit margins for fleet managers across the country. As with any decision, gaining a complete understanding of a possible change with your business is absolutely necessary. Use this guide to help you understand fuel advances, how to get them, the pros and cons of using them, and get a feel for the common mistakes owner-operators can make when inquiring about them!
Understanding Fuel Advances
Fuel advances can provide trucking companies with immediate cash to deliver their next load. All owner-operators know the immense cost of diesel fuel, and the poor gas mileage trucks have can lead to fuel expenses being one of the most costly expenses in the industry. The nature of late invoice payments, which force drivers to wait up to 90 days after their delivery to receive their hard-earned money, can pose challenges regarding immediate cash flow. Cash flow gaps make expenses like fuel difficult to cover, making fuel advances a viable and beneficial tool for drivers.
Oftentimes, drivers or owner-operators will use their invoice factoring company to attain fuel advances. Many factoring companies offer fuel advances of up to 50% of the invoice cost before the load is dropped off to ensure drivers can deliver their load and continue operating. Fuel advances are one of many benefits that invoice factoring can offer workers in the trucking industry. Read more about the invoice factoring process and how it can benefit the trucking industry here.
How do I get a Fuel Advance?
Using a freight invoice factoring company or a fuel card is usually the easiest way to obtain a fuel advance. Many factoring businesses will offer advances and fuel cards for drivers to save big on fuel purchases as an incentive and added bonus for being their client. Fuel cards provide massive savings, up to 90 cents per gallon, at specific gas stations across the country for enrolled drivers.
Invoice factoring companies incentivize their business by offering fuel advances up to 50% of the billed invoice before drop-off. Combining invoice factoring and fuel advances can provide a multitude of benefits for truck drivers and owners alike. Click here to find the perfect invoice factoring company for your trucking needs!
An Example of a Common Fuel Advance Process:
- Driver or owner-operator uses Factor Finders to find the best factoring company for their business needs
- Driver or owner-operator makes a deal with the freight factoring company because they offer incentives like fuel advances, fuel cards, and low rates
- Driver picks load up
- Factoring company advances up to 50% of the invoice before drop off
- Driver uses the advance for fuel
- The load is delivered
- The driver quickly receives the rest of his money, minus fees, from the factoring company!
Benefits of Fuel Advances
Those in the trucking industry can use fuel advances to majorly benefit their operating consistency. The ability to have a portion of your money upfront allows for more loads, improved consistency, and ease of mind. Pairing invoicing benefits such as fuel advances with a fuel card can also give way to cheaper gas prices.
Late and untimely invoice payments can cause a sense of uncertainty. Drivers are forced into a world unsure of when they’ll be paid next, leading to dissatisfaction. Factoring your invoices can rid drivers of this uncertainty; providing security. Fuel advances allow truckers to get ahead of untimely invoices, giving access to more work and more money!
Where Do I Look for the Best Fuel Discount Deal?
Fuel discounts, cards, and advances may seem difficult to come by, but there are many resources available to those in the transportation industry. Fuel advances are commonly distributed by freight factoring companies, so finding the best factor for your business needs is imperative. Other ways outside of a freight factoring company do exist, however, for those in the industry to acquire discounted fuel. Read about these alternatives below!
Where to Find Alternative Fuel Discounts
Fuel Cards
- Fuel cards are a valuable asset for freight companies looking to track fuel expenses and save money. They work similar to a credit card with specific discounts at certain fuel stations across the country.
Trucking Associations
- Trucking associations provide a magnitude of benefits for their members. As a knowledgeable resource, they understand the immense cost of fuel for trucking companies, leading to some offering fuel discount programs!
Mobile Apps
- There is a wide array of apps made to help drivers find the best fuel prices in specific areas. GasBuddy, for example, provides real-time gas prices at stations, allowing you to compare prices and find the most fuel efficient route for your delivery. They also provide a debit-like card with savings up to 25 cents per gallon.
Bulk Purchasing
- Gas stations sometimes offer discounts up to 70 cents per gallon if you purchase fuel in large quantities. Bulk fuel purchasing can also make it easier to track fuel expenses, gain exclusive discounts, and control costs.
Company Partnerships
- As a driver, check to see if your trucking company is partnered with fuel providers for discounted rates. If you’re an owner of a trucking company, it is a good idea to see if major gas stations offer partnership programs to cut down on fuel expenses.
Common Mistakes Made When Using a Fuel Advance
As with any business decision, there are pros and cons to consider when thinking about invoice factoring and fuel advances. One of the biggest mistakes truck operators can make when advancing cash is not spending the allotted money on the needed fuel and/or equipment for the delivery. This can lead to serious cash flow problems and lost profit, making the entire delivery a waste of time and resources. Below is a list of some common mistakes made when searching for and implementing fuel discount programs with your business:
Ignoring Fees, Terms, and Conditions
- Transaction, maintenance, or annual fees are a few examples of frequently overlooked costs that may be hurtful to your business when using fuel advance programs. The terms and conditions of your agreement contain the information necessary for understanding what is expected from both you and the factoring company. Before you commit to any such contract, ensure you understand the costs and information that may not be as transparent.
Not Comparing Discounts
- There is a wide array of companies who offer fuel advances as incentives to do business with them. To stay competitive, companies provide many discounts to pull as many customers as possible, creating the need for an in-depth search when considering who to use. The worst thing you can do in this circumstance is use the first company you see because there are likely better deals out there!
Not Considering Geographical Location
- Some companies may give great discounts but only in certain states or fuel stations. Consider where you or your company will be in the future to avoid your fuel card or discount program being worthless.
Disregarding Tiered Benefits
- Some fuel cards associated with factoring companies and fuel advance programs offer tiered benefits based on the amount of fuel purchased. Ensure you use enough fuel to make these incentives worth it, and if not, search for another worthwhile program.
Neglecting Customer Service
- Companies may have great rates and promotions, but the reputation and quality of customer service should be equally important. A company that lacks speedy and helpful customer service may not be worth doing business with if you have trouble getting their supposed deals in a timely and reliable manner. Always ensure the company you are dealing with is dependable to avoid doing long-term, important business with unreliable people, even if it may cost you slightly more money.
Are Fuel Discounts Worth it?
The trucking industry is an underappreciated and essential aspect of the American economy. Working with an invoice factoring company or alternative program to cut costs on fuel purchases can assist in saving millions of dollars, improving profit margins and enhancing the financial stability of these businesses. Decreased spending on fuel purchases also allows companies the freedom to offer competitive pricing, gaining a major advantage. On top of those perks, fuel discount programs lend themselves to long-term business relationships between fuel providers, trucking companies, and factoring companies, generating reliable service and comfortability. Combining these benefits can result in cost savings for the end customer and lead to economic growth. Everyone from small trucking companies to large freight enterprises has the potential to benefit from fuel discount programs!
Integration of Fuel Card Programs with Factoring Services
Fuel card programs and factoring services often integrate to provide truckers and fleet operators with a seamless financial solution that optimizes both cash flow and expenses. Here’s how it works:
Coordinated Financial Benefits
- Immediate Access to Funds: By leveraging factoring services, you can receive same-day payments for your invoices. This instant funding can be directly aligned with your fuel card program, ensuring you have the cash flow necessary to cover fuel costs without delay.
- Reduced Costs: Many integrated fuel and factoring programs offer significant discounts on fuel purchases. These savings can be substantial over time, directly impacting the profitability of your operations.
Streamlined Processes
- No Hidden Fees: Transparency is a key advantage. Integrated programs often come with straightforward pricing, eliminating hidden fees and making it easier to manage your finances.
- Credit Checks: These programs typically offer free credit checks for a vast network of brokers and shippers, so you can transact with confidence and minimize risk.
Added Perks
- Loyalty Rewards: Fuel card programs often come with perks such as loyalty rewards, allowing you to accumulate points or cash back on fuel purchases.
- Unified Management: By combining both services, you have a single point of contact and a unified dashboard to manage your financial operations efficiently.
Summary
Integrating fuel card programs with factoring services offers a comprehensive solution that enhances liquidity, reduces costs, and simplifies financial management for those in the trucking industry. With benefits like immediate funding, no hidden fees, and loyalty rewards, you can keep your fleet running smoothly and profitably.
