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How to Choose a Business Vehicle Program: 6 Questions to Ask Yourself

By Ben Reiland March 23, 2017

Categories: Vehicle Reimbursement

It’s not always easy to find the right vehicle program for your business. That’s true if you’re a small business owner supporting a few remote employees. It’s true if you’re a regional sales manager overseeing an entire mobile workforce. There are a number of factors to consider when deciding which type of vehicle program will support both employee needs and your bottom line. You’ll need to think about the overhead costs, potential liabilities, and administrative burden associated with each vehicle program option. Thankfully, this process can be streamlined to help you make the best decision to suit your company’s unique needs.

To simplify the decision-making process, consider the three essential business vehicle program options available to you. Those include a fleet program, a vehicle reimbursement program or a custom hybrid program. Each of these offer different advantages, so you’ll want to think about what’s going to work best for your business.

Questions to Consider

To help think through which factors matter most to your business, we’ve developed this series of questions. Answering them will help you to make the right decision, knowing it will work for your employees and your business.

To select the most efficient vehicle program for your business, you’ll need to answer the following six questions:

1. Do you have the capital to purchase or lease vehicles for your mobile workforce?

If the answer is yes, you can afford to administer company-owned vehicles to all of your mobile employees, then a fleet program is a viable option. If the answer is no, perhaps because you’re running a small business with limited capital or your mobile workforce is too large to support, a reimbursement program would be the better option. In this case, a tax-free Fixed and Variable Rate (FAVR) program can help you to ensure cost efficiency.

2. Can your business assume the risk for vehicle liabilities?

If your business can assume the risk for any potential accident at any time (beyond standard business hours), a fleet program would be an available option. If your business wouldn’t be able to take this risk, a reimbursement program would allow you to avoid total liability. Instead, your company would only assume this risk with vehicles employees drive for business purposes.

3. Do you have the administrative resources available to support your program?

If you have the resources to manage corporate vehicles, a fleet program would still be suitable. If your business doesn’t have the overhead for managing this, consider a reimbursement program with automated mileage capture systems that include a simplified submission and payment processes.

4. Does your company require specialty vehicles?

If your company requires the use of a particular sized truck, to deliver product or inventory for example, you’ll want a fleet program. For these business types, purchasing specialty vehicles will ensure requirements are met. A fleet program will also give you the ability to incorporate your branding onto the vehicle. If your company doesn’t have these requirements, a reimbursement program where an employee can choose to drive any type, make or model vehicle provides flexibility to the employee.

5. Are your mobile employees on the road every day?

If your employees drive more than 5,000 business miles per year, your company can best support them with a fleet or FAVR reimbursement program. Say your employees don’t require a vehicle every day? Think about implementing a cents-per-mile reimbursement program where employees can get paid tax-free.

6. How sizable is your mobile workforce?

If your current mobile headcount is high, you can create efficiencies by having a fleet program. That being said, if you have a smaller mobile workforce, a reimbursement program will be more cost-effective for your business. A FAVR program is also a potential option, but keep in mind that they require you have at least five employees for you to qualify for tax-free reimbursements.

Next Steps

Using your answers to these six questions, you’ll be better positioned to make the right decision when selecting your business vehicle program. Ultimately, if you consider the unique needs of your employees and of your business, you’ll be on the path to successfully managing a mobile workforce.

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