If you find yourself struggling with determining the true cost of a gallon of fuel, while going through a spreadsheet you have been updating every night at close…you are likely in the reactive side of doing business. Automation of processes in the FBO industry has always been a need and today it is a more tangible resource FBO technology offers. The automation of fuel inventory management is key to reconcile fuel sales to stock inventory levels and better track your margins.
Best Practices for Fuel Reconciliation
1. Track True Cost: Let innovative FBO technology do the job for you. There are software solutions that offer useful reporting capabilities for fuel management like FBO Director and Total Aviation. Comprehensive software will ensure that every gallon is accounted for from the moment it is delivered as a load with an associated lot cost, up to when it turns into a fuel sale. The ability to track from which lot an aircraft fueling depleted and at what cost, ensures a smooth and accurate reconciliation to better track your margins.
2. Manage All Inventory Levels: Whether you own the fuel in your tanks, have a consortium operation or hold fuel inventory for other companies or contract fuel supplier… it is important that your fuel tracking system can manage multiple owned inventories separately across different fuel farms. Just because you do not currently have a more complex operation in terms of fuel inventory ownership, having the right software is a step in the right direction for when your operation can handle this. It may be just another module the software already offers in a package. The advantages of having an inventory-tracking oriented system include:
- Ability to change fuel lot inventory owner (i.e., from company-owned to FBO-owned)
- Ability to manage and update fuel levels by inventory owner
- Manage defuel and refueling operations without affecting FBO inventory
- Track physical vs. system inventory details as of date
- Solve inventory variances
- Perform fuel inventory adjustments in the past
3. Fuel Farm Daily Closings: It is not only smart but efficient to record your current physical levels at the time of closing the day. This ensures that all your trucks’ meter readings are up to date for the next day’s first fueling and helps us to get an accurate idea of what the balances were when running your report for previous dates. Up-to-date physical inventory count recorded daily makes it easier to perform an end-month close as well.
4. Pumped versus Sold: How many times have you found yourself fixing discrepancies between sold gallons and pumped? Part of the fuel inventory reconciliation process must be pulling reports that can provide any discrepancy on the spot, so that they can be fixed right away before closing the day or the month. The better FBO software solutions become in tracking inventory levels, with automation and integrations, the less chance of even having this sort of discrepancy. However, even if there are still inevitable mistakes that can be made by human error, having a comprehensive system that focuses on fuel management the way an FBO needs, will allow for this to be caught in time, reducing administrative time required to reconcile fuel sales to inventory levels.
5. Manage Complex Fuel Pricing: Fuel suppliers and the FBO can have complex pricing structures conditioned to specific variables per their agreements and having a software solution to accommodate these structures can also ensure that your reconciliation process is accurate, and you can send your supplier good reporting. X-1FBO has a Pricing module that is rules-based. This means that fuel discounts can be attached to specific conditions like payment type, contract fuel supplier, inventory owner, etc. Being able to schedule fuel pricing ahead of time or set it up to apply within a specific date range, based on a fixed margin or at 0 cost (such as into plane scenarios) … is a capability that makes end-of-month reconciliation smoother.
Fuel inventory reconciliation may not seem like a relevant step within your fuel management. However, not having clear processes in place supported by a comprehensive system that can automate most of the inventory tracking is a reactive way that can put your business at risk. There are readily available technologies tailored to the needs of FBOs that are cost-efficient and ensure you get what you pay for in terms of fuel management. Relying on manual reconciliation practices can have a high impact on unaccounted fuel losses.