Fuel Retailers Insurance in South Africa

Due to the nature of the fuel / petroleum business and the high cost of holding stock, cash flow is a key to the success of your business.

Fuel Retailers Insurance - where the insurance company
can be used as 'Guarantor' when buying fuel / petroleum

Why Fuel Retailers Insurance:

Fuel Retailers Insurance, basically means the fuel / petroleum retailer can use the insurance company as a "guarantor" when buying fuel.

Without a guarantee, the fuel 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 today’s business industry where guarantee values requested are reaching very high levels (even in excess of R1million), it makes more sense to use the insurance guarantee, as opposed to tying up excessive cash in providing a bank guarantee. Having more capital in the fuel (or petroleum) business, can improve the cash flows further and reduce any loan risks or trading risks.

Typically the insurance cover kicks in when the debit order is unpaid and the fuel company cannot collect the amount due by the retailer. The insurance may also cover other items such as rental, lubricants, or trade receivables bought on credit.

DIB Solutions (Pty) Ltd have partnered with reputable underwriters and various insurance companies in order to assist our clients with appropriate Insurance cover – we can therefore also assist clients with tailor-made products (where applicable) at competitive premiums. We provide a professional and personal service, as well as build long-term relationships with our clients. There are a few product options you may consider in the market place – therefore discuss your individual needs with one of our experts.

Also note some of the important considerations when looking for Fuel Retailers Insurance:

  • Fuel Retailers Insurance (or "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!
  • Existing bank guarantees can be replaced in order to free up assets.
  • Existing bank guarantees can also be topped-up, if insufficient.
  • If you are a new retailer, it reduces your capital requirement as the bank guarantee investment is removed from the overall set up cost.
  • No assets are normally required as collateral security – unsecured.
  • Retailers trading on a pre-payment basis, can easily move onto Automated Clearing Bureau (ACB), without impact to their cash or assets base.
  • The Fuel Company normally stipulates the value of the guarantee required. This is usually approximately two full deliveries value and dependent on the tank capacity and sell-off volume of the business.
  • The guarantee can also be used to increase existing guarantees, or replace the entire guarantee.
  • Payment for fuel via Automated Clearing Bureau (ACB) debit instead of pre-payment - which has a cash flow benefit on the Monthly premium. The premium can be written off against taxable income.
  • Opportunity costs - to take into consideration.

Please contact us today for fast, friendly, professional advice and service!

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