Fighting High Fuel Costs

Fuel prices are dominating the news right now, but for many businesses, driving is not optional. Contractors, delivery services, mobile service providers, sales teams, inspectors, cleaners, landscapers, and other local businesses often rely on vehicles every day. When fuel prices rise, those costs can quietly eat into profit margins.

The good news is that businesses do not necessarily need to drive less to spend less. Small changes in how vehicles are used, maintained, purchased, and tracked can make a real difference.

Here’s a video with some tips on how to increase fuel efficiency. 

One of the simplest ways to reduce fuel costs is route planning. Combining appointments by area, avoiding unnecessary return trips, and using mapping tools to plan efficient routes can reduce both fuel use and staff time. Reducing even a few kilometres per day can add up over the course of a year.

Businesses should also look at whether they are using the right vehicles for the job. A large truck may be necessary for hauling equipment or materials, but it may not be the best choice for every errand, estimate, inspection, or service call. Right-sizing the fleet—using the smallest practical vehicle that can safely and reliably do the work—can reduce fuel costs, maintenance costs, and replacement costs over time.

Vehicle maintenance also matters. Proper tire pressure, regular oil changes, clean air filters, and timely repairs can improve fuel efficiency and prevent more expensive problems later. A poorly maintained vehicle can cost more in fuel long before it ends up in the repair shop.

Driver habits are another overlooked area. Fast acceleration, excessive idling, hard braking, and speeding all use more fuel. Businesses with multiple drivers may want to create a simple driving policy that encourages fuel-conscious habits. There are also GPS tracking systems available that can be used to keep an eye on driver behaviour to reduce wear and tear on vehicles.

Fuel purchasing habits are also worth reviewing. If employees are buying fuel at random locations or using different payment methods, the business may be missing out on discounts and creating extra bookkeeping work. A corporate fuel card, fleet card, Costco membership, preferred fuel program, or business credit card with straightforward cash-back rewards can help reduce costs while keeping fuel purchases easier to track.

Here’s a video with some fuel efficiency tips. 

For some businesses, it may also be time to look at electric or hybrid vehicles. They are not the right answer for every company, especially where long distances, hauling, or rural travel are involved. However, for businesses with predictable local routes, fleet vehicles that return to the same location each day, or high fuel usage, electrification may be worth considering.

A fuel-saving strategy is really a profitability strategy. Vehicle purchases, fuel expenses, charging equipment, financing costs, rebates, and tax incentives can all have accounting and tax implications. Electric vehicles and hybrids may be good long-term investments for some businesses, but the numbers need to be tested against cash flow, business use, financing costs, available incentives, and capital cost allowance rules. Shaw & Associates can help you compare the real cost of different options, not just the sticker price.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.