The first working day of the month
The accounts manager opens the fuel surcharge workbook. There is a tab per customer. One customer pays a percentage that moves in steps as the diesel price crosses bands. Another has a pence per mile surcharge above a base price agreed three years ago. A third reviews quarterly, a fourth monthly, and one large account has a clause nobody quite remembers and is billed the way it was last time.
The new reference price goes in, the tabs recalculate, and the figures are typed into the invoicing system one customer at a time. Then a customer queries last month's surcharge, and someone has to reconstruct how it was worked out.
The formula is not the difficult part
Any single surcharge calculation is simple. The difficulty is that there are dozens of them, each agreed separately, and the agreements live in contracts, emails and people's memories, not in the invoicing system.
- Each customer's base price, bands, review period and reference source differ.
- Terms were agreed by the owner or a sales manager and passed on verbally.
- Surcharges are added to invoices by hand, so some get missed on new customers and one-off loads.
- When a customer queries it, there is no stored workings to send.
- Mid-month rate changes or contract renewals are not reflected until someone remembers.
What goes wrong when it is manual
Surcharges that are missed are simply revenue you agreed and never charged. Surcharges that are wrong lead to credit notes, queries and delayed payment on the whole invoice, not just the surcharge line. And because only one or two people understand the workbook, month end depends on them being in. Customers notice inconsistency too, and it weakens your position the next time you need to talk about rates.
The surcharge engine we build
- Each customer's agreed mechanism is entered once, from the contract or email: base price, how the surcharge is calculated (percentage bands, pence per mile, per pallet, per load), review period and which reference price is used.
- The reference fuel price you have agreed with customers is entered or fetched for each period, and stored with its date and source.
- At each review point the engine calculates each customer's surcharge and holds it for an accounts person to approve.
- Approved surcharges are applied automatically to invoices raised in your transport or accounts system, including one-off loads for that customer.
- Each invoice can carry a short statement showing the reference price, the base, and the calculation, so queries answer themselves.
- When a contract is renewed, the new terms are dated so older loads still use the old mechanism.
| Part of the job | Workbook | Engine |
|---|---|---|
| Storing customer terms | A tab each, plus memory | One record per customer, dated |
| Monthly or quarterly review | Recalculate every tab | Calculated and queued for approval |
| Applying to invoices | Typed in by hand | Added to every relevant invoice |
| Answering a query | Rebuild the working | Statement stored with the invoice |
We do not set or recommend surcharge mechanisms. The engine applies whatever you and each customer have agreed.
What month end looks like after
Accounts approve a list of surcharges instead of building them. New customers get their surcharge from the first invoice because the terms are captured at onboarding. When a customer queries a figure, the working is already attached. And you can see, across the whole customer base, how much fuel cost is being recovered and where the old agreements are no longer covering it, which is useful the next time you sit down with a customer to discuss rates.
Signs this is your month end
- One person owns a fuel surcharge spreadsheet that nobody else understands.
- Some customers have not had their surcharge reviewed for a while.
- One-off loads go out without the surcharge.
- Surcharge queries take a day to answer.
- Nobody can say how much fuel cost is recovered overall.