How to Introduce an Automated Vehicle Reimbursement Program: 4 Tips
There are a number of factors to consider when building your vehicle reimbursement plan. Many organizations select a standard vehicle as a baseline for their reimbursement program and then consider the locations and type of driving that the drivers will be operating in. They can then establish mileage bands that appropriately compensate drivers without paying for the depreciation of their vehicle and develop fair policies based the right time to replace the vehicle.
Other factors include the always contentious business and private sue percentages that the business will pay and the variable expenses like maintenance, oil changes, tire replacement, taxes, and other expenses and costs which will vary greatly by driver and region.
🚗 1. Getting Started
All of the factors noted above have to be built into your new vehicle reimbursement program. But if you get it right, there are many good reasons to look at having an automated vehicle reimbursement program at your company or business. They include helping to achieve your organizational goals, reducing your liability, removing extra administration and, most importantly, generating on-going annual cost savings.
Those savings can be from between 10 to 30 percent and can help all your employees and managers make informed decisions when it comes to the options for vehicle reimbursement. But a good vehicle reimbursement program can also build employee morale and generate an aura of goodwill about their employer, that they are being treated fairly.
🚗 2. Fair Payment
Everyone who drives their own vehicle on company business needs to be fairly compensated, but the vehicle reimbursement program also has to be fair to the business as well. A properly designed vehicle reimbursement program will allow you to integrate all the factors already mentioned like mileage bands, insurance and license fees, maintenance, and all other major factor in a custom program that ensures you don’t pay too much or too little.
This also encourages drivers to only drive on company business when it is absolutely necessary and to bill the organization accordingly. If people get paid fairly they use what they need and leave the rest. It’s better and fairer for you and for them.
🚗 3. Enhanced Use of Technology
A vehicle reimbursement program takes most of the paper out of the paperwork of keeping track of a company’s drivers. Employees can fill in forms online and even use the new mobile technology to enter data on their phone or tablet at the end of the day. The data can then be compiled in an organizational database that not only records individual drivers and their usage, but also can be used to generate reports and provide analysis for vehicle use and patterns throughout the company.
A customized vehicle reimbursement program can also generate payments that can be made directly to an employee’s bank account and provide them with an electronic record that they can review and use to track their mileage and their payments. Many vehicle reimbursement programs are now completely virtual and are stored on clouds or remote servers to provide faster and more secure information and response times.
🚗 4. Reduced Liability and Tax Exposure
The initial benefits from vehicle reimbursement program is that you save time and money from having to own or a fleet of vehicles. But you also don’t have to people who drive for you on company business for 24 hours a day. This immediately reduces both your insurance costs and your overall liability. But the fact that a vehicle reimbursement program is a non-taxable reimbursement strategy means that both you and your employees who drive can benefit. A well-designed vehicle reimbursement program builds in all the requirements of the tax department so that payments under these plans are not taxable to the employee and provide a payroll tax deduction for employers. It really is a win-win situation.