Corporate Auto Plan – Reimbursement?
by admin on 4-6-2011 • Tags: Business car leasing, corporate auto, fleet maintenance management, fleet management & maintenance, fleet vehicle maintenance program, vehicle & truck fleet leasing
There is often a debate about how a company handles their corporate auto program. There are two clear options: employee reimbursement and a company provided fleet management and maintenance leasing program.
Employee reimbursement programs are often considered a benefit to employees, much like health insurance coverage. Employees are required to submit their mileage (which they are reimbursed for), maintain their vehicles and assume liability for the vehicle (carry their own business insurance). An employer may use this program to their advantage when negotiating a salary. Because of the perception of the reimbursement program being a benefit to the employee, they may be started at a lower salary. This also takes the vehicle maintenance out of the employer’s hands.
Employers should not be fooled by the, seemingly, low level of responsibility this type of vehicle program offers them. Employee vehicle reimbursement is not without its risks. Most employees exaggerate their business mileage to increase reimbursement. The employee is responsible for the vehicle, which can mean an undesirable corporate image. The employee may choose a lesser vehicle in order to keep costs down, not keep up on maintenance due to cost and not consider how their vehicle choice best represents the company.
A company using a business car leasing program has the benefit of total control of the vehicles that are representing the company and, often, see more predictable costs for the program. Studies have shown that a 30% decrease in business mileage has occurred when a fleet vehicle program is put into place. Employees are reporting actual miles, rather than mileage inflated to cover additional costs that they incur. A total fleet management and maintenance program allows the company to unsure the vehicles represent the company vision and are maintained on a regular basis. Regular vehicle maintenance can mean decreased costs in the life of the lease.
Fleet management and maintenance programs have the benefit of, ultimately, lower costs to the employee and employer. The employee does not have to carry additional insurance or worry about maintenance of the vehicle and the employee benefits from freed up cash flow and no maintenance worries.
With a fleet management and maintenance program for your business vehicle needs, the worry is put back on your business at hand.