Buy Energy, Fuel and Supplies Better

29 September 20228 min read

Combat the rising cost of business with these clever procurement strategies.

Whether it is record costs for fuel over the summer, ongoing increases in the price of electricity this autumn, or inflation on goods and supplies, one thing is clear: the cost of doing business is going up.

The new Government has pledged to provide help, especially around electricity costs, but there are also things you can do as a business to buy energy, fuel and supplies more effectively.

At Allstar, we have a number of solutions that can help companies to manage in this.

Electricity

For many businesses running vehicles, the cost of electricity is becoming an increasingly important factor as they move to electric cars and vans.

While electric vehicles can be more cost-effective to power than petrol and diesel versions, the price of electricity is still rising, and businesses will want to mitigate this as much as possible.

For those employees who charge vehicles at home there is some good news: the Government has announced support for home energy prices, saying that from October 1, a new ‘Energy Price Guarantee’ will mean a typical UK household will now pay up to an average £2,500 a year on their energy bill for the next two years. This may help encourage drivers that switching into an EV will not become unaffordable.

Because there was no energy price cap for companies, and they are not always able to fix their energy price through fixed deals, many were reporting projected increases in energy costs of more than 500%.

Government research found that a fifth of businesses with 10 or more employees reported they were on a variable rate for electricity, with a tenth saying their fixed or hedged prices would expire by the end of the year, exposing them to higher prices.

As a result, the Government has said it will limit many businesses’ exposure to higher energy prices through the Energy Bill Relief Scheme, by discounting prices to a 'government supported price’. The cost is linked to the estimated wholesale portion of the unit price a company would be paying this winter, and compared to a baseline ‘government supported price’ which is lower than currently expected wholesale prices in the next six months.

But there are still other actions businesses and employees can take to limit the costs of charging. At Allstar, we can give you complete visibility of drivers’ energy costs through Allstar Homecharge, which monitors all charging taking place at home, no matter what tariff employees might be on, and pays those costs directly to the energy supplier.

This streamlines a potentially complex process, and also provides you with all the data needed to ensure your fleet is being run efficiently. You’ll be able to see how much energy was used, when, and at what rate, allowing you to build a picture of fleet charging. It will also give you the opportunity to understand where costs could be reduced. For example, a driver might be charging their vehicle on a standard rate tariff, when they could be using a much cheaper off-peak or EV-specific one.

Whilst on the road, the Allstar One Electric card, provides access to 8,600 charge points around the UK, so that drivers have choice on where to charge – a crucial element of reducing costs and increasing productivity, as they can spend less time searching for a plug, and access available chargers through the Zap Map app and our online site locator.

Goods and supplies

According to the Office for National Statistics, prices for goods and services increased by 4% in the 12 months to July 2022, and is the highest annual inflation rate for this sector since June 2006.

As a result, firms are having to pay more for the supplies and services they need to keep operating, and employees on the road are also facing increased costs for day-to-day working expenses. As an example, hotel prices rose by 9% in the year to July 2022.

Indeed, in another Government survey of businesses, more than a quarter said their main concern was the inflation of good and services prices.

This pressure on prices has a knock-on effect on cashflow. If a business is facing higher costs for goods and supplies, it often needs to cover them through increasing its own prices, and getting invoices and work paid on time.

Also, it needs to understand its own operational costs sooner rather than later. Billing for work, and further down the line receiving expense claims that are far higher than were budgeted eats into profit margins.

So in an inflationary market, it is important to keep spend down wherever possible, but also understand what your costs are as soon as possible, so you can budget accordingly.

The Allstar Plus and Allstar Expense business credit cards allow firms to control levels of employee spending, but also see what is being spent and when, as well as providing valuable breathing space on repayments, so the pressure on cashflow can be relieved.

Added to this is the ExpenseIn app, which gives employees the ability to upload receipts immediately. As a result, you know exactly where you are financially at any point, so you can make budgetary decisions armed with relevant, timely information about your business.

Fuel

The cost of petrol and diesel hit an average of 182p per litre and 193p per litre during the summer and although prices have fallen slightly in recent times, they are still higher than many businesses have had to pay before.

As our previous article explains, the reason fuel costs have been so high, and continue to be, is not purely because of the price of oil. In fact, the primary reason is one of global refining capacity, and there is no foreseeable change to this.

So what can be done? Clearly, buying fuel as cheaply as possible is a big step towards reducing costs. With Allstar, there are various ways you can do this.

The first is to take advantage of our Discount Diesel offer, which can result in savings of up to 10p per litre on all purchases*.

The second is to buy fuel in smarter ways. With our UK Fuel Price tool, you can search for up-to-date petrol and diesel prices at 90% of fuel sites in the UK, meaning drivers can always seek out the cheapest. It can make a big difference. 50 vehicles buying 50 litres of fuel every week at £1.78 a litre rather than £1.85 would save around £9,000 a year.

Also, more effective routing will help reduce costs. Our Site Locator tool and Co-pilot app allows you to plan stops for fuel that don’t take drivers out of their way, so they don’t waste time and fuel.

In the current financial climate and with Government soon to introduce new policies, there is only one thing that is certain: there will be change. At Allstar, we’re here to help you manage those changes, whether it be reducing costs, streamlining admin or understanding and controlling expenditure.

*Savings on Diesel can be made at participating Discount Diesel sites on our network when the card is swiped.

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