How HR managers benefit from outsourced mileage reimbursement programs
Mileage Reimbursement

How HR managers benefit from outsourced mileage reimbursement programs

Outsourcing their company's mileage reimbursement program saves HR professionals time, even on routine tasks like payroll.

November 28, 2022

Lindsay Clayborne
Lindsay Clayborne

Human Resource managers have a crucial role to play in every organization. Their job is not easy, because they field requests from every department in the company. Few other roles require a staff member to interact with so many different people internally.

HR departments have the herculean task of ensuring everyone in the company is paid. Beyond paychecks, employees are often owed reimbursements for expenses they incur as part of their work. For example, when an employee drives their personal car for work, they need to be reimbursed for the trip. If these reimbursements are occasional or infrequent, this task can be balanced.

If, however, paying reimbursements is a regular task, it can begin to interfere with an HR manager’s duties. Writing contracts, hiring, doing payroll, implementing and enforcing employee guidelines, and working toward the happiness of an entire staff—all these things take time and require care.

When a task is frequent, lacks systematization, and depends not only on one’s own ability to stay organized but also on the same ability in others, time is inevitably wasted. This tends to be the case with employee vehicle reimbursements.

Traditional, in-house vehicle reimbursement programs involve mileage logging and reporting. Mileage logging is not limited to taking odometer readings, because the IRS requires that other information be logged as well—for example, the purpose of a business trip must be recorded—for reimbursements to be considered justifiable. Once a driver properly logs their mileage, they must submit the log to HR for reimbursemen

So, the list of duties that this process adds to an HR manager’s workday include:

-   Preparing a mileage log for drivers to use

-   Ensuring that mileage logs are submitted on time

-   Adjusting every driver’s paycheck based on the value of their individual reimbursement

-   Familiarizing oneself with IRS guidelines for vehicle programs

But this list is incomplete. Other duties that we have not yet discussed must also be acknowledged. For a vehicle program to function properly, every driver’s insurance documents need to be verified. Not only must insurance be current, but also properly endorsed.

And when it comes to keeping staff happy, in-house vehicle programs cause problems. The reason is that it is difficult to reimburse all drivers with fairness and accuracy. Different drivers incur different expenses while driving for work. If a driver covers a rural territory on the Gulf Coast, their gas expenses will be lesser than their colleague who drives in LA. Repair costs, insurance costs, and resale values are also geographically sensitive.

Therefore, when paying reimbursements, some drivers win and others lose. This is a recipe for unhappy staff. Many companies pay the IRS standard rate to all their drivers. This method is equal, but it is not equitable. Certain drivers are overcompensated, others undercompensated, for the business use of their personal vehicle.

Companies have historically tried to simplify their vehicle programs by paying a car allowance to their drivers. This avoids the problem of having to chase up missing mileage logs at the end of the month.

However, because allowances are not substantiated by the same information included in a mileage log, they are treated—and taxed—like compensation. A car allowance is subject to all the same taxes as the rest of the paycheck. That means fewer dollars in drivers’ pockets, and company tax waste that could otherwise be reinvested.

As we can see, HR managers can easily get bogged down in the complexities and irrationalities of company vehicle programs. The time spent managing a vehicle program is considerable, adding intensive tasks to an already busy role.

For these reasons, many HR managers are seeking to outsource their vehicle reimbursement programs.

The ideal outsourced vehicle program resolves all the problems HR departments encounter. When considering programs offered by different vendors, HR people ask the following questions:

  1. Will outsourcing our vehicle program save my department time?
  2. Will it make our drivers happy, and how?

Let us take these questions in turn.

1. Will an outsourced program save time?

A proper outsourced program saves Human Resources time by reducing the administrative burden of vehicle reimbursements. Cardata, for example, achieves this with our mobile app, which handles mileage logging and reporting. It is designed to capture all the data relevant to business driving and store it in case the IRS ever wants a look.

Cardata’s software suite also includes a payment processor, which eliminates the need for tedious paycheck adjustments. HR is relieved completely of the duty of calculating and factoring in individual driver reimbursements.

Moreover, Cardata verifies insurance. This process is complicated, because there are over 100 insurance agencies in the US, and every agency’s policies look slightly different. It takes Cardata less time to do a more thorough job of verifying insurance. Not only is this duty removed from HR’s full plate, but, through this process, Cardata also reduces their clients’ risk profiles.

The right vendor also monitors your drivers closely to ensure compliance. Cardata’s software suite has mechanisms for identifying and addressing compliance issues that affect vehicle reimbursements. It takes a long time to become familiar with the relevant IRS publications; Cardata has been studying them since 1999.

2. Will my colleagues be happy with the outsourced program?

Outsourcing your program to Cardata means fair and accurate reimbursements. The “data” in our name comes from our thorough databases, which calculate regional reimbursements. As we saw, regional data is important because different drivers incur different expenses. It is, however, very difficult to determine regional figures without reference to databases as capacious as Cardata’s. No driver will be under-reimbursed for business mileage on a Cardata plan.

Fair and accurate reimbursements lead to happy drivers. If you currently offer a car allowance, transitioning to a reimbursement program will put more money in your driver’s pockets. If you are coming from a fleet of company cars, transitioning to a reimbursement program will empower your drivers to drive the vehicle of their choosing, and to build equity.

Drivers also save time every day. Building mileage capture software into their workflow means they never have to read their odometer again. Neither must they manually log their departures and arrivals, nor must they write down the business purpose of their trip.

A driver population of 100 saves more than 4000 hours per year, collectively. That is a lot of time for your mobile sales team to reinvest in building client relationships.

Outsourcing your vehicle program will make someone else in the company happy, too. Your CFO will be glad to hear that a Cardata reimbursement plan reduces vehicle program costs by 30% and generates a 250% return on investment.

Conclusion

The HR department benefits considerably from an outsourced reimbursement program. Precious time is regained for HR to focus on people and culture—their core responsibilities. If your organization could use extra hours, increased savings, reduced risk, and content drivers, schedule a discovery call with us.

Interested in learning more?

Book a demo