Fuel Management: Cutting Fleet Costs, Emissions, and More

Did you know that fleets that switch to using accountable reimbursement programs could potentially reduce their fuel spend? This article explains how accountable fuel management turns one of the three largest fleet costs into a controllable lever while simultaneously lowering carbon emissions.

What Is Fuel Management?

Fuel management involves how businesses monitor, organize, and control the amount of fuel that employee drivers use for work purposes. For fleets, fuel cards are typically commonly used to help compensate employees for fuel expenses. Fuel cards can be a streamlined and simplified way for companies to keep track of how much teams are spending on fuel, but hold some big drawbacks. For teams using fuel cards or receipt-based fuel reimbursement, it can be time-consuming to track all fuel expenses and fuel cards.

For companies looking to manage fuel using a Fixed and Variable Rate (FAVR) program, fuel is included as a variable expense that’s reimbursed to employees for work-related travel purposes. FAVR is a popular vehicle reimbursement option as it typically provides reimbursements that are accurate and reflect genuine expenses. FAVR reimbursements can also be given tax-free, provided the program follows IRS guidelines, providing a substantial benefit to employees and employers.

The Business Case for Acting Now

Even a slight improvement in fuel economy for fleets could save thousands of dollars per vehicle, since fuel is often one of the largest expenses. Every extra mile per gallon also punches above its weight in environmental, social and governance scores, given that transportation generates 28 percent of U.S. greenhouse gas emissions. Finally, adopting a compliant Fixed and Variable Rate (FAVR) reimbursement model keeps payments tax-free and avoids the expense of payroll tax that comes with flat car allowances or non-accountable reimbursement.

Core Pillars of an Effective Fuel Management Strategy

Preventive maintenance—routine oil changes, tire rotations and air-filter replacements—maintains engine efficiency, boosts miles per gallon and prolongs vehicle life. Driver coaching delivered through mobile micro-learning modules curbs hard braking and rapid acceleration, both of which burn unnecessary fuel and raise collision risk (https://cardata.co/blog/fleet-safety/). 

Finally, a data-driven and compliant FAVR program flexes with regional fuel prices and individual driving patterns so that reimbursements stay fair for employees while remaining cost-effective for employers. Mobile mileage apps eliminate paper logs and can potentially free up about forty-two hours per driver each year, producing cleaner data and more time for revenue-generating work. 

From Theory to Action

High-performing vehicle programs set explicit miles-per-gallon or kilowatt-hour targets by vehicle class, monitor performance monthly and investigate anomalies as soon as dashboards flag them. Beyond considering a full switch to a FAVR program, some teams choose a hybrid approach — using FAVR for high-mileage drivers and cents-per-mile for low-mileage employees—to optimize spend across diverse driving patterns. 

It’s worthwhile for teams to consider piloting new policies with small driver cohorts before scaling, allowing teams to capture quick wins, fine-tune parameters and build internal champions. Many organizations that follow this playbook could potentially uncover savings opportunities and more effective fuel management.

Conclusion and Next Steps

Start with a 360-degree audit: map current fuel spend, benchmark fleet efficiency and model the comparative savings that fuel cards and FAVR reimbursements can unlock. Once the data is visible, it’s often clear how teams can proceed in a way that’s most beneficial to them.

If you are ready to transform fuel from a cost center into a strategic advantage, contact Cardata to learn more about transitioning a fleet of vehicles to a FAVR program.

Disclaimer: Nothing in this blog post is legal, accounting, or insurance advice. Consult your lawyer, accountant, or insurance agent, and do not rely on the information contained herein for any business or personal financial or legal decision-making. While we strive to be as reliable as possible, we are neither lawyers nor accountants nor agents. For several citations of IRS publications on which we base our blog content ideas, please always consult this article: https://www.cardata.co/blog/irs-rules-for-mileage-reimbursements. For Cardata’s terms of service, go here: https://www.cardata.co/terms.