Retail Accounting

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Fuel retailers have their heads in the clouds

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There are unique challenges for both major oil companies and independent groups in the fuel retail sector. These include the Cloud Computingtracking and accounting for fuel and dry stock, managing and controlling cash, high volumes of paperwork, razor tight margins and a hypercompetitive market.

With complex and diverse distribution strategies emerging such as franchising and various partnership models (CODO, DODO), it is essential the fuel retailer does not lose control of their network as it becomes more fragmented. Business risk needs to be managed and performance improved through more effective information management.

A business model has evolved over the past 10 years whereby approximately 94% of all service stations (within the UK) are now classed as convenience stores. This requires new supply chains, systems, processes and higher volumes of stock, which all have, financial implications both in cash utilisation and controls.

If this isn’t enough, many fuel retailers are operating in larger or multiple geographical markets. Due to the dispersed nature of the physical locations of the service station this can provide challenges in gaining the depth and breadth of management information to drive effective decision making.

As the business models increase in complexity and size, many fuel retailers are bringing the benefits of technology to bear by deploying cloud computing applications across their networks.

A cloud-based application, or “Software as a Service” (SaaS), is a software delivery model in which the software and data are hosted centrally on the internet. It can be accessed securely via a web browser on a mobile phone, laptop or tablet. It has become a common delivery model for many business applications including accounting, POS, fuel pricing, BOS and CRM.

Benefits of Cloud-Based applications to Fuel Retailer

Transparency and decision making

Fuel retailers can have greater transparency across their networks, allowing for improved performance and risk management. For example, a cloud accounting application such as CounterBooks provides one data repository for all accounting data. The centralisation of data storage reduces the need for dealers/franchisees to send manual reports to a head office to be re-entered into a separate database with its inherent data integrity and cost issues.

Another benefit of a single data repository is that data can be ‘sliced and diced’ (systematic reduction of a body of data into smaller parts or views that will yield more information) to identify value drivers and trends to assist in decision making. Whether you are a 4,000 site major oil company operating across international borders or a 50 site independent group, you can analyse any accounting data by any parameters.

Capex to Opex and affordable

With traditional software models, the fuel retailer would need to procure assets (such as servers and software licenses) which are capitalized and therefore are charged to the Balance Sheet. By contrast cloud based applications are often payable on a monthly fee, usually on a per user basis (or volume of transitions, per sites etc.) making the deployment easily scalable and affordable. The costs are considered to be an operating expenditure rather than a capital expenditure and so are charged to the Profit and Loss.

The final benefit is that it conserves cash as there are rarely substantial upfront costs as the monthly fee includes hosting, backups, updates and fixes.

Saves time, improves data accuracy and reporting as well.

When operating multiple cloud based systems, the fuel retailer benefits from what is called an ‘ecosystem’. As with a biological ecosystem, where various entities share an environment and cooperate, with cloud based ecosystems multiple applications are able to communicate and share data.

For example, a fuel retailer can import sales and purchase data generated by the existing Point of Sale and Back Office systems into the cloud accounting system. This import process can account for approximately 95% of all data input, thereby reducing staffing costs while improved accounting accuracy and providing a better understanding of the business’s financial position.

For more information on online accounting for fuel retailers, please contact CounterBooks. www.counterbooks.com

Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

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