Fuel Guarantee
Benefits to the retailer
Due to the nature of the fuel business and the high cost of holding stock, cash flow is one of the keys to the success of your business.
The business needs to generate enough revenue to meet daily, weekly and monthly expenses, and at the same time maintain stock levels to ensure uninterrupted trading in accordance with the fuel companies’ requirements. The retailer therefore needs sufficient working capital to meet the demands of large fuel and supply payments.
The retailer will typically either take out a large loan or apply for an adequate overdraft facility. The need for a bank guarantee or cash deposit held by the Oil Company is over and above these requirements and drain further cashflow from the business.
Without a guarantee, the retailer effectively trades on a ‘hard cash’ basis. Revenue needs to be in the account prior to payment for fuel, and delivery is only scheduled subsequent to payment. This working capital required is costly.
In the event of a bank guarantee being issued, the retailer can enjoy the benefits of receiving fuel on consignment however the bank guarantee can be costly to the retailer.
With the introduction of the Garagesure insurance product, the fuel guarantee alleviates the need for a cash on demand guarantee and allows the service station owner to utilise his or her capital where it is best required – in the business!
Having more capital in the business can improve the cash flows further and reduce any loan risks or trading risks. The strong backing of our insurer (AA (ZA) by GCR) means that our guarantee is accepted by most Oil Majors.
Approved by
BP Southern Africa
Puma Energy
Sasol Oil
Total South Africa
E10 Fuels
Caltex Branded Marketers (North & South)
Important Risks
The Calling Up of a Guarantee by the Oil Major Makes the dealer liable for the incurred debt
a fuel guarantee is effectively a credit uplift between the dealer and the oil major
Sureties are signed by the directors/members of the company and require settlement with Garagesure in case of the call-up
garagesure will institute recovery proceedings against dealers who fail to settle their liabilities
Cost
Annualised cost in a corridor of between 2.5% and 6.5% of the value of the guarantee at risk.
Price depends on the quality of risk and site performance and whether or not short-term insurance is placed with Garagesure as well
Premium payable on a monthly basis (or annually) in advance, upon inception of the guarantee
The premium is a tax deductible expense to the business
VAT can be claimed back, further increasing the net saving to retailer
What we need from you
Please visit the “forms” tab - the following application forms are required to be completed:
Fuel Guarantee Application form
Acknowledgement form
Surety details form
Consent to do credit check form
Existing Retailers
Copy of valid Commercial insurance policy
Copy of most recent audited / reviewed financial statements and last 3 months’ management accounts
Last 6 months’ bank statements
Proof of past 6 months’ fuel turnover (litres)
Written trade reference from oil company confirming that fuel account is in good standing
Valid Tax Clearance Certificate
Copy of CIPC Company Registration document
List of personal assets & liabilities for all listed directors/members
Proof of residential address (all listed directors/members)
Proof of business address
Copies of ID documents for each listed director / member and if married in community of property, please provide a copy of the spouse’s ID
New Retailers
Twelve ((12) month’s projections
Business Plan
Copy of CIPC Company Registration document
List of personal assets & liabilities for all listed directors/members
Proof of residential address (all listed directors/members)
Proof of business address
Copies of ID documents for each listed director / member and if married in community of property, please provide a copy of the spouse’s ID
Broker Network
Brokers are essential in spreading the product into the market and therefore we only make use of brokers as per our FSP license.
We refer direct approaches from potential clients to brokers of our choice in that specific region;
Brokers earn a commission;
We have a well established broker network in place but are always looking to expand this and therefore welcome any opportunities to discuss new business opportunities.