Fleet Accounting: Efficient Cost Tracking Made Easy

Accurate fleet accounting and the reliable recording and processing of invoices play a crucial role in day-to-day fleet management—because every vehicle fleet involves significant costs. It is therefore not surprising that many fleet managers would like to simplify the invoice entry process. Manually managing invoices for accounting purposes is time-consuming and also carries the risk of errors: Each invoice must be entered individually, checked for accuracy, saved in the system, and assigned to the appropriate cost centers. In this article, you’ll learn how your company can digitize fleet invoice management to reduce the workload and avoid accounting errors.

Fleet costs – from individual items to total cost of ownership (TCO)

For many companies, the vehicle fleet represents a valuable asset, especially when the vehicles are owned by the company. Although leased vehicles are accounted for on the lessor’s balance sheet, the monthly lease payments must be recorded and verified as recurring operating expenses in the company’s accounting records. But that’s not all—fleets incur a wide variety of different cost types, including:

• Personnel costs
• Fuel costs
• Tires, spare parts, repair and maintenance costs, and third-party services
• Rentals for garage and storage space, office and recreation rooms, repair and washing facilities.
• Vehicle taxes, insurance, GEZ fees, registration and deregistration fees
• Depreciation and lease payments and much more

All of these costs must be allocated to the appropriate cost centers in the fleet accounting system. This provides a comprehensive overview of all expenses, allowing fleet management to identify exactly which areas of the company’s fleet are causing particularly high financial burdens or where there is hidden potential for savings.

Manual invoice entry in fleet management can therefore lead to a number of problems and irregularities that not only increase the administrative burden but can also result in inaccurate data and analyses. It is therefore advisable to switch to a digital solution for fleet accounting that enables efficient and accurate invoice entry. With modern tools, you can save time, minimize errors, and perform a thorough cost analysis as well as calculate the total cost of ownership.

Manual invoice entry: This is where the dangers for fleet accounting lurk

Manual fleet management is still common practice today. This results in a lot of paperwork—especially when it comes to recording receipts—a huge burden on company staff, and a high error rate. The following problems frequently arise: duplicate entry of invoices and overlooked irregularities when recording fuel data. The latter occurs particularly often and subsequently leads to incorrect calculations of actual fuel consumption and errors in the financial statements as well as in tax calculations. In such cases, a plausibility check is not possible.

It becomes even more complicated when insurance premiums need to be allocated on an accrual basis. This is only possible through comprehensive accounting. However, if there are gaps in the data, it is simply not possible to perform a timely cost analysis or evaluate the “Total Cost of Ownership” (TCO).

The vehicle fleet as a fixed asset

A company’s vehicle fleet is generally considered a fixed asset. These are assets intended to serve a company’s business operations on a long-term basis. These include, among other things, vehicles such as delivery vans or company cars that are used on a long-term basis and are not intended for immediate sale. These vehicles are reported as fixed assets on a company’s balance sheet and are depreciated over their useful lives to reflect their loss in value over time.

On the other hand, there are current assets, which comprise the assets of a company that are expected to be converted into cash, consumed or sold within a financial year or a normal business cycle, such as merchandise or raw materials.

Fixed assets are divided into two categories: property, plant, and equipment—which includes buildings, machinery, vehicles, and office and business equipment—and intangible assets, which include, among other things, patents, licenses, and trademark rights. In accounting, the vehicle fleet is classified as a tangible asset.

Depreciation of cars in the vehicle fleet

In a fleet, company cars are typically depreciated using the straight-line method. Under this method, the vehicle’s acquisition cost is allocated evenly over its useful life. For passenger cars, a standard useful life of six years is generally assumed. This is based on the depreciation tables (AfA) of the Federal Ministry of Finance. A passenger car with a purchase price of 45,000 euros is depreciated at a rate of 7,500 euros per year over six years.

Another option, though less commonly used, is declining balance depreciation. Under this method, the depreciation amount is higher in the early years and then decreases. This method is based on the assumption that the vehicle depreciates more rapidly at the beginning of its life cycle.

Fast and secure invoice recording: support from fleet management software

Fleet management software streamlines the process of recording and processing invoices for fleet management teams. This benefits both fleet managers and the company’s accounting department alike. Through the integrated digital collaboration between these two departments, potential errors can be quickly identified or prevented from occurring in the first place. A comprehensive software solution also enables the phased implementation of an accounting interface in various stages. We’ll show you what this implementation process looks like within your company:

Stage 1: Digital invoice processing with export function

The simplest option is to set up an export function for consolidated invoices that are automatically processed by the fleet management software. Monthly digital invoice files from leasing companies or gas station operators are automatically captured, processed, and then transferred as a data set to the financial accounting department.

During invoice processing, validity checks are performed in real time, and any missing information is reliably added. This ensures that relevant consumption data at the vehicle level is stored in the fleet management software and is available for all analyses. Through defined application programming interfaces (APIs), systems such as SAP, DATEV, or Diamant can be specifically addressed and supplied with the corresponding accounting entries.

Stage 2: Integration of the fleet software into the workflow

The next step involves using an OCR scanner to capture analog incoming invoices and transfer the generated data records, along with the scanned documents, to the fleet management system. There, the scanned invoices are stored in the digital archive as audit-proof PDF or TIF files or saved as links in a separate archive. With powerful fleet management software, your company can streamline invoice processing and optimize collaboration between the fleet department and accounting.

Accounting in the fleet: Important notes on subledger accounting

If you maintain your vehicle fleet as a subsidiary ledger, it is important to exercise particular caution. Subsidiary ledgers are used to provide more detailed information about certain general ledger accounts, but they also carry the risk of misunderstandings. Companies that use a cloud solution or hire a service provider to handle invoice entry should therefore carefully verify where the invoices for the vehicle fleet are processed and archived. Please note that moving electronic bookkeeping abroad requires an application to the relevant tax office and is only possible in countries with which Germany has concluded a double taxation treaty (DTT). The requirements are stringent, and it is crucial to ensure that the German tax authorities retain control over the tax bases.

With accounting integration in your fleet management software, you’ll benefit from a simplified and more efficient workflow. You’ll save time, avoid errors, and always have all the important information at your fingertips. Take advantage of these benefits to optimally manage and continuously improve your company’s fleet.

Simplify fleet accounting with Carano Fleet+

Carano Fleet+ by CarWise is a comprehensive fleet management software solution that offers automatic invoice capture and secure document storage in its own archive. Even in its standard version, the software provides your company with numerous import interfaces—for example, to leasing companies—at no additional cost. Importing toll or insurance fees is also easy.

Many invoices list the operating status of the vehicles and passenger cars in your fleet. The software even tracks this information, automatically generates operating time and mileage forecasts, and compares them with the terms of your fleet’s lease agreements. With the click of a button, a traffic-light system alerts the user to any instances where a vehicle in the fleet exceeds or falls short of the terms of its lease agreement, ensuring clear cost transparency at all times.

With Carano Fleet+, the otherwise tedious task of calculating annual forecasts is done in the blink of an eye. Cost forecasts help you determine the ideal replacement timing for your vehicles, and you can easily schedule costly purchases. Annual expenses can be accrued and transferred monthly to financial accounting as journal entries. The powerful reporting module is integrated throughout the entire program and allows you to analyze any fleet costs in detail, broken down to the individual vehicle or passenger car level. This enables fleet managers to quickly identify outliers and cost drivers and promptly take appropriate measures that will benefit the entire fleet.