How to Account for Fuel Inventory

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Accounting for fuel inventory requires a functional method of volumetric measurement, both when receiving and issuing fuel. Environmental factors can cause a perceived inventory shortage; for example, in high temperatures, some of the fuel in unpressurized tanks can vaporize and therefore be unavailable for liquid volume measurement, or even escape when the vessel is opened to take a manual measurement. Alternatively, cold weather can cause volume contraction in liquid fuel stock. Theft prevention though the use of locking mechanisms is also important to maintain an accurate fuel inventory.

  • Record fuel transactions in a logbook. Companies with multiple locations should have a logbook for every dispensing location, updated periodically by the site's administrative staff. Company drivers should keep a personal fuel transaction logbook. Shared vehicles should have their own log-in addition to independent driver logs, so that the two data sets may be cross-referenced later. Vehicle and driver logbooks should also include the distance traveled each day to monitor fuel efficiency.

  • Periodically combine the data from the logbooks into a computer spreadsheet to form a bigger picture of organizational fuel use. Companies with fuel depots can use the logbook data to determine how much fuel remains in stock.

  • Manually check and record actual fuel in storage periodically using both the mechanized indicators and a manual dispstick. Comparing the actual fuel stock on hand to the log-based spreadsheet estimate can alert the company to faulty pump equipment or thefts. According to Cantest Solutions Inc., evaporation of fuel should not result in more than a 0.125 % measurement discrepancy even on an average summer day. Discrepancies significantly higher than that may indicate a problem.

  • Lock pumps and gas caps at all times when not in use. This prevents inventory shrinkage due to theft.

  • Compare data from one month to the next using the data from the logbooks and the spreadsheets. Cross-referencing the data can reveal trends about fuel use, and may even provide a helpful indicator for vehicle maintenance, since the records will track each vehicle's fuel consumption.

Tips & Warnings

  • Creating multiple spreadsheets based on the logbook data can allow accounting staff to track different factors relevant to the business. Some businesses, like a gas station, may be content to record simple fuel in and fuel out reports, while business that use fleet vehicles may gain useful insight from more complex record keeping and reporting.
  • It is important to take manual readings from time to time, particularly when managing underground fuel tanks. Mechanized reading devices can fail and tanks can leak, meaning that the simple volume test with a dipstick ruler can catch a problem before it snowballs into something more severe.

References

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