2021 is not a great year to manage fleet vehicles. The reopening economy and lingering pandemic shortages are driving used cars to their highest prices in years. As of June, the used car market was 34.3% above last year’s pricing levels, making company cars the most expensive option out there to keep your workforce on the road. The current state of things may lead a company to transition from fleet to FAVR reimbursement.
It’s simple math. Want to scale up your fleet? You need to purchase more vehicles at record high prices. But running the other way and selling off your company cars also means obtaining a considerable ROI on your initial investments. This post will cover the top 5 reasons to transition out of fleet and into individualized mileage reimbursement.
1. Decreasing Risk & Liability
Personal use of company vehicles increases risk and liability. Employees use company cars used 24/7 for different purposes (not necessarily generating revenue to the business). Additionally, nothing guarantees the employee is the only one behind the wheel. The latest Motus Safety report found US employers spent $5.5B in 2019 on insurance. If serious injury or worse occurs and a company provided vehicle is found at fault, no matter who’s driving, the business faces litigation.
2. Reducing Costs
If cost savings is your priority, there has never been a better time to switch from fleet to FAVR. Not only would you be making a profit with the current high demand for used cars, but you’d also eliminate the maintenance costs that come with a company-provided vehicle program. If an employee leaves or an unexpected situation requires your entire mobile workforce to stay off the road indefinitely, your business will continue to make lease payments for those vehicles.
By offering a personalized reimbursement based on how much employees drive and where they drive, the company can offload the costs of idle vehicle expenses, maintenance, insurance and liability.
3. Less Administrative Burden
Companies should focus their time and efforts on their core business, not on managing a fleet of vehicles. Unfortunately, many decision makers only consider alternatives like mileage tracking. These alternatives can be both time consuming and hard to execute accurately every single time. An individualized mileage reimbursement program like FAVR can be fully automated. that calculates accurate rates no matter where your workforce is. This ensures your employees can dedicate their time to activities that generate revenue for your business, while fairly reimbursing them.
4. Ensuring Compliance with IRS Regulations
Mistakes with fleet vehicle mileage reporting can often land companies in hot water with the IRS. This can be avoided with a personalized reimbursement rate program such as FAVR, is the only IRS-recommended methodology to reimburse mobile employees tax-free for the different costs associated with driving for business. This is possible thanks to our scalable platform that accounts in real-time for both fixed and variable expenses and updates the personalized reimbursement rates based on costs specific to where your workforce is located and how many miles they drive.
5. Freedom of Choice for Employees
Truth is, no one enjoys driving a vehicle they’re not comfortable with. Your employees are using their company car for both business and pleasure. Providing them the flexibility to select a model they actually like can make a complete difference in their productivity and engagement levels.
Now is the Time to Switch From Fleet to FAVR
Used car prices keep rising, so why not make that work to your advantage?
There has never been a better time to achieve a considerable ROI on your company cars… Or a worse time to keep them. A partner like Motus can help make the transition from fleet to mileage reimbursement as seamless and painless as possible. With our platform, every mile is tracked, and every expense is accounted for, eliminating tax waste and keeping more money in your employees’ pockets.
As one customer said, “FAVR is the future. You’ll wonder why you didn’t change earlier.” But don’t take our word for it. Watch this virtual panel where three business leaders discuss their main tipping point to get out of fleet, what made their transition successful and the many benefits they have experienced since.