An illustration of poorly designed service stations

Sep 21, 2018

The Top 5 back-office system failures in a service station

Back-office systems and forecourt solutions are the backbone of any service station. Many entrepreneurs know all too well that a successful business does not rely solely on the business owner, but instead depends on various systems and processes to maintain and grow the business. Back-office systems are crucial to a 24-hour fuel retail environment, and even of greater importance if the dealer owns multiple sites.

What are the 5 most common back-office system failures?

  • Inaccurate credit card / speed point recons. We have observed that some dealers do not bank their speedpoint machines at the same time as End Of Day, which means transactions cannot be reconciled accurately with batches completed at different times of the day. When this process is not done properly, the dealer wouldn’t know how much to expect and ultimately doesn’t have his finger on the pulse. One of the most common tricks used by petrol attendants is that of paying by a duplicate slip (or reprint). The result is often evident in duplicate slips, with human intervention required to sort out the variance or difference (if the variances get picked up at all).
  • Theft of wet stock. Controlling the inventory of both dry and wet stock accurately is a key activity of any site’s back-office system. We have observed lack of controls on wet stock, where a staff member sets the pump on ‘stand-alone’ setting and gains access via universal key to extract fuel from the tank with no system record of the activity. Dealers of multiple sites often fall prey to this type of shrinkage, and we have seen staff members extract up to 4000 liters every Friday in one service station, for example.
  • Poorly defined cash-up processes and spreadsheets. To our surprise, there are dealers out there who do not undertake a formal and regular bank reconciliation of their site’s financial activities. Those who do, either print their bank statements or have elaborate spreadsheets for back-office staff to maintain. In every scenario, all these processes require significant time from the site owner and / or accountants. With the data always open and ‘editable’, the integrity of the data could be questionable.
  • Inaccuracies in accounting for VAT. As a result of poorly defined back-office systems and processes, dealers are often unable to claim back the maximum amount of VAT from SARS. In one scenario, we found a dealer that could be claiming as much as R70 000 back where in reality successful VAT claims accounted for less than R10 000. It is also worth noting that many accountants do not fully understand the fuel retail industry and its intricacies, and are unable to provide proper guidance to the dealer.
  • Multiple systems for multiple businesses. Service stations are no longer the businesses they once were only focusing on fuel. Today, service stations have become a one-stop-shop consisting of an elaborate convenience offering including a shop, quick-service-restaurant (QSR), car-wash, ATMs, gas and much more. Managing all these ‘businesses within a business’ can be overwhelming. With improper systems, the dealer constantly finds him/herself in ‘fire-fighting’ mode, reacting to problems and not picking up errors soon enough until SARS decides to do a VAT audit, for example.

What are the success stories of proper back-office systems and forecourt solutions?

  • A centralized ‘dashboard’ of all site activities including all sales, inventory movement and financial activities captured automatically means that the dealer has far more control of the overall business as well as peace of mind. As opposed to ‘fire-fighting’, the dealer can rather invest his or her time more into growing the business or being present on the forecourt with customers as opposed to checking up on staff that the bank statement has been reconciled.
  • No-one site or service station is alike. With back-office systems set up specifically for the unique business context, dealers often see a significant reduction in shrinkage, crime, theft and ‘creative accounting practices’. With all activities accounted for and greater controls on how the data can be edited or manipulated means the dealer can often stop theft in its tracks as opposed to discovering the loss in the monthly trial balance.
  • A significant difference on the bottom-line and overall profitability. Dealers are often unaware of how back-office system inefficiencies or lack of controls hurt the site’s profitability. Over-time, the right system solutions can significantly impact the business for the better.

Are you ready for change?

Business owners are becoming acutely aware of being open to an ever-changing, fast-moving world of competition and digitization of business activities. Facilitating successful change in a site is not a quick or easy process, however the tried and tested back-office system solutions offered by PetroCONNECT understands these pressures and realities all too well. Developed by fuel retailers or site owners, we place ourselves in the shoes of the dealer and have the insight to mentor dealers into changing their businesses for a more sustainable and profitable future.

Learn more about PetroCONNECT back office services