Managing fleet vehicles requires considerable cost and administration. That’s why many companies opt to use 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 several reasons. 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. To cap “excessive use” of fuel cards, some companies restrict employees to using fuel cards on weekdays. However, that won’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. 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, there’s no way of knowing without some sort of reporting established.
Some companies have acknowledged this problem and 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 and 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.
Companies often require a personal-use chargeback. This 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.
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. This allows employees to capture and submit the mileage from their business trips. With the right app, the mileage logs may be IRS compliant. This information will ensure contained fuel spend while providing employees with an accurate chargeback.
If the business use of company-owned vehicles is lower than what employers think, and employees are undercharged for personal use, is it really worth the expense? Fleet is consistently the most expensive vehicle program. Changing to another vehicle program won’t just offer companies cost control over fuel costs. Companies can also avoid the vehicle expenses, maintenance and mitigate the risks that come with running a fleet program. And with the price of vehicles steadily increasing, there has never been a better time to get out.
Motus has the expertise to implement vehicle programs and has been doing so for decades. Cost control remains a priority for many companies coming out of the pandemic. With a future as unknowable as ever, flexibility is another necessity companies must plan for. Fleet programs lack flexibility and cost more than any other program, because the company is stuck with the bill when assets like vehicles aren’t used. While implementing software for a personal use chargeback remains an option to control fleet expenses like fuel, the best option remains getting out of fleet. Still need to be convinced? Interested in learning more? Check out our guide, Fleeting Costs: Transitioning Your Idle Fleet to a FAVR Program.