By Ben Reiland
January 31, 2023
Parents need a break. Whether you have kids or not, you can acknowledge that, more often than not, they’re a needy handful. Love them with your whole heart, but that won’t stop you from wanting some alone time. Fleet vehicles are the babies of the vehicle program world. Managing them requires considerable cost and administration. That’s why many businesses opt to use babysitters, or fleet management companies. Of all the expenses to manage with a company-provided vehicle program, one of the highest is fuel. In 2019, fuel accounted for 23% of vehicle program costs. What can a company do to get their gas spend under control? This blog will cover fleet fuel management options and things to watch out for in your company’s program.
Fuel management is a challenge for many fleets, for a number of reasons. The two main ones are fuel cards and personal-use chargeback. These are tied at the hip, but we’ll break them down separately, starting with fuel cards.
For starters, most companies with fleet vehicles also provide employees with a fuel card. Employees can use this card whenever they need to gas up. But businesses have no insight into how that gas is used. Most companies offer fleet vehicles with the perk of personal use. Employees can use the vehicle for non-business purposes. To cap “excessive use” of fuel cards, some companies restrict employees to using fuel cards on weekdays. However, that doesn’t stop employees from gassing up late on Friday and early on Monday, or gassing up multiple vehicles. Which leads to the issue of personal use.
Companies have personal-use chargebacks for two reasons. First, it allows employers to recoup some of the expenses of not only gas spend, but all the other costs like lease payments and maintenance. The problem with this solution is that many companies charge a flat amount to every employee, but that average charge has increased steadily every year—even when driving costs have not.
Second, charging flat amounts for personal use isn’t exactly fair. Not every employee will drive their company-provided vehicle 50% for business, 50% for personal use. Some employees may only drive 10% personal use. Unfortunately, without some mileage tracking element, there’s no way of knowing. Finally, and most importantly, the IRS considers personal use of fleet vehicles a taxable benefit. Companies that don’t have some established reporting for personal-use chargebacks expose themselves to audit risk.
Some companies have acknowledged the problem of being unable to accurately manage fleet fuel spend. A number of businesses attempted to fix it by adding GPS to track each vehicle. This will allow them to determine when the vehicle is being used for business versus personal reasons, and charge accordingly for personal use. However, this sours the perk of the company-provided vehicle. Employees don’t want to be tracked. Potential talent won’t see the vehicle as a benefit. What’s more, installing a GPS system, or telematics, is far from a cheap solution.
There are two options companies can look to as they consider the issue of fleet fuel management. One is an app-based personal-use chargeback. The other is shifting vehicle programs entirely. As with any choice, there are benefits and downsides to both. Let’s take a look at the fleet mileage tracking app route first.
By implementing a fleet mileage tracking app, employees capture and submit the mileage from their business trips. With the right app, the mileage logs will also be IRS compliant, removing risk of audit. This information will ensure contained fuel spend while providing employees with an accurate chargeback. It will also provide the company with considerable insights into their mobile workforce. At a bare minimum, they’ll have a better understanding of how much fleet vehicles are used for business versus personal reasons.
Even with this level of fleet fuel management, an app won’t change the fact that fleet is the most expensive vehicle program. Changing to another vehicle program won’t just offer companies cost control over fuel costs. However, this may be a much easier step for both employers and employees than transitioning to a new program.
Implementing fleet mileage tracking software for a personal use chargeback remains an option to control fleet fuel expenses. But there are still several areas of expense that go unaddressed. Fleet programs lack flexibility and cost more than any other program, because the company is stuck with the bill when assets like vehicles are, at worst, involved in an accident, or, at best, aren’t being used. By switching to a different program, companies can avoid the vehicle expenses, maintenance and mitigate the risks that come with running a fleet program. And with the price of vehicles remaining high, there has never been a better time to get out.
The biggest issue with switching vehicle programs is change management. It can be a lot for a company that’s used fleet vehicles for decades. It can be a lot for driving employees who are used to operating in company provided vehicles. The right vendor can help with the transition process, but it can still be too big of a step for companies looking into fleet fuel management and other cost control measures.
Your company wants to prioritize on fleet fuel management. Of the two options mentioned above, which appeals most to you? For most readers, it will be the fleet mileage tracking app. It provides businesses with so many things their fleet programs are missing: oversight of fleet fuel spend, accurate and compliant personal-use chargebacks and insight into the mobile workforce. Other companies will be drawn to the opportunities of shifting to a new vehicle program, one without such high expenses. Either way, Motus can help. Interested in learning more about how Motus helps companies with fleet programs? Check out our fleet solution.
With Motus, accurately capturing business mileage has never been faster or easier.
Contact us today or take a virtual tour of the Motus Platform.
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