For companies that are thinking about implementing a vehicle reimbursement program and doing away with the company car expense, there is often considerable excitement that the company may be saving money by making this decision. After all, a company car or a fleet of cars comes with expenses that range from fuel expense and insurance costs to repairs, maintenance, liability and more.
More than that, individual employees may prefer the comfort of driving their own vehicle that they are familiar operating. Having your employees drive their own vehicles is a cost-effective solution that may be loved by all, but it also can be seemingly complicated. For example, you may need your employees to track mileage in a certain way, and you may not be certain that their recorded mileage is accurate and honest. These are only a few of the challenges associate with a car reimbursement program, and there are some easy ways to address your challenges.
1. Choose a Uniform Mileage Rate
There are two main options available when instituting a vehicle reimbursement program, and these are to have a flat rate offered to all employees for the monthly use of their car or a per mile rate. The government provides tax benefits for business use of personal vehicles as well, and you can keep this in mind when you attempt to determine the best mileage rate available.
It is ideal, however, to have one method adopted by all employees rather than to allow them the opportunity to choose which method they like best.
2. Set Up a Standard Reporting Procedure
While there are challenges with implementing the vehicle reimbursement program, there are also challenges associated with monitoring the reporting of mileage. A smart idea is to create a standard log page that all employees are required to use. This can replace the need to review notebooks of mileage logs that employees may keep on their own.
Keep in mind that mileage logbooks often do not have any conformity to them, and employees each often create their own reporting system. By teaching them how to complete the logs you provide, you are eliminating one aspect of the stress you may feel with a vehicle reimbursement program.
3. Implement the program with commitment
Deciding to proceed with the implementation of a vehicle reimbursement program is often the easy step. Actually implementing the use of the program can require more time and effort. It is important to fully think through your program, and provide your employees with specific rules, requirements and structure for the program. This uniformity will make it much easier for you to monitor and for you to calculate the actual reimbursement required for each employee per pay period.