{"id":12582,"date":"2021-10-21T17:03:45","date_gmt":"2021-10-21T15:03:45","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=12582"},"modified":"2021-10-21T17:03:45","modified_gmt":"2021-10-21T15:03:45","slug":"reimbursement","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2021\/10\/21\/reimbursement\/","title":{"rendered":"The Negative Consequences to Driver Reimbursement"},"content":{"rendered":"<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><b>gettyimages.com\/geber86<\/b><\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Some corporate managers feel an employee reimbursement program costs less than offering company-provided vehicles. Shifting the burden of the company vehicle program to employees may seem, at first, to be the ideal way to accomplish cost reductions. But a closer examination shows this may not be the case. If your company spends less by going to driver reimbursement, it is because your employees are shouldering the hidden costs. In fact, after closer analysis, reimbursement may actually be the more expensive option, and directly harm employee productivity and corporate image in the marketplace.\u00a0<\/span><\/p>\n<div class=\"incontent02Ad\" style=\"text-align: justify;\"><\/div>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Here are 30 reasons why reimbursement doesn\u2019t work:<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 1: A Hiring Advantage and\u00a0Employee Retention\u00a0Advantage are Eliminated<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Providing a company vehicle gives a business a competitive edge in hiring top-caliber salespeople, technicians, and managers.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">This is especially true if key competitors do not offer a company car program. A company-provided vehicle can be used as a recruiting tool and company benefit. Repeated industry surveys show prospective employees view a company vehicle as an equivalent benefit to health care coverage and pension benefits.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">By not offering a company vehicle, employee recruitment and retention may be adversely affected. A company car is a positive recruitment tool. Competitors will use a company car as an incentive to recruit employees away from companies. Conversely, efforts to hire a prospective employee who already has a company car at a company that only offers reimbursement would be handicapped because of the large outlay of money that would be required to purchase a new car and insurance.\u00a0<\/span><\/p>\n<div id=\"div-gpt-ad-incontent01\" class=\"banner-im\" style=\"text-align: justify;\"><\/div>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Many companies, especially those in the pharmaceutical industry, must provide competitive compensation by offering a company vehicle as offered by their competitors.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 2: Use of Employee Vehicles\u00a0Increases Liability Exposure<\/span><\/h2>\n<p style=\"text-align: justify;\">\n<figure class=\"article-img float-margin\" style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><img class=\"wrapImageCMS aligncenter\" src=\"https:\/\/fleetimages.bobitstudios.com\/upload\/global-fleet-management\/content\/article\/2021-09\/carinsurance-__-720x516-s.jpeg\" alt=\"If an employee is involved in an accident and does not have &quot;business&quot; insurance on their reimbursed vehicle, the personal insurance carrier can deny the claim. - gettyimages.com\/boonchai wedmakawand\" \/><\/span><figcaption class=\"caption-description\">\n<p style=\"text-align: center;\"><span style=\"color: #0000ff;\">If an employee is involved in an accident and does not have &#8220;business&#8221; insurance on their reimbursed vehicle, the personal insurance carrier can deny the claim. <\/span><span style=\"color: #0000ff;\">gettyimages.com\/boonchai wedmakawand<\/span><\/p>\n<\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Some companies believe they eliminate liability exposure with a car allowance. These companies may be avoiding the lesser amount of the damage because the employee\u2019s insurance is primary; however, they are still responsible for the liability exceeding the employee\u2019s insurance coverage. But, in driver reimbursement, the company does avoid liability exposure if an incident occurs during personal use during off-business hours.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Ask yourself, what is your liability exposure if the employee postpones safety related repairs? What liability would a company face if an accident were caused by deferred maintenance? A company-provided vehicle allows you to control these variables and minimize this liability exposure.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">If a company reimburses drivers, it will have to be sure the employee maintains a high enough insurance level. Even still, if an accident occurred, the employer would probably be brought into a lawsuit as well, no matter who carried the insurance.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 3: Employee Productivity\u00a0Will Decrease<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A business that does not provide a company vehicle has little or no control over the condition of the employee\u2019s vehicle. If the amount of reimbursement by the company is not sufficient to cover actual expenses, the employee may defer preventive maintenance, which can lead to breakdowns, downtime, and unnecessary car-rental expense.\u00a0Also, since preventive maintenance is an immediate out-of-pocket expense, there is a temptation on the part of the employee to postpone routine maintenance, as well as more expensive mechanical repairs.\u00a0Depending on an employee\u2019s financial wherewithal, some may find it difficult to pay for repairs out-of-pocket. If unable to pay, the vehicle may have to sit idle at a repair facility forcing the driver to either rent a vehicle (if they can) or wait for a check from the home office to get their vehicle out of the shop and back on the job.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">In addition, a reimbursed driver will be required to spend an inordinate amount of time coordinating repairs, maintenance, rentals, and registration renewals, which could otherwise be devoted to selling.\u00a0In the event of an accident, with a company-provided fleet, drivers do not have to manage the repair of the vehicle and get a rental replacement vehicle, which is a tremendous productivity enhancement.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 4: Reimbursement\u2019s Negative\u00a0Affect on Driver Morale<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A company-provided vehicle helps create high employee morale. Drivers don\u2019t have to worry about getting insurance, paying for unexpected major repairs, or routine maintenance. Employees perceive that the company values them more if it entrusts them with a company car.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">On the other hand, driver reimbursement can negatively affect driver morale since some drivers will be overpaid while others underpaid, depending on the type of reimbursement program a company sets up.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Some reimbursement programs do not take into account mileage variability between employees. If the car allowance is provided to a low-mileage driver, then the employee is enjoying additional compensation. For high-mileage drivers, the car allowance may not be sufficient to cover the employee\u2019s cost and may result in reduced performance by the employee because he or she feels cheated.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Different vehicle requirements, geography, and area economics require a very flexible reimbursement policy to cover these diversities or inequities will exist. Because of built-in inequities in a reimbursement program, some drivers may feel they are being made to subsidize the company\u2019s operating costs.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">With a company-provided vehicle, there are no inequities among drivers and no agitation for higher allowances. In addition, under driver reimbursement, employees will constantly agitate for higher allowances as cost-of-living prices escalate.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Employees also expect reimbursement for fuel or a cents-per-mile reimbursement with the car allowance. Depending on the amount of the car allowance, it could cost the company more than providing a company car.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Also, with a reimbursement program, the company cannot distinguish if fuel is purchased for personal use or only business use.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 5: Wrong Company Image\u00a0May be Projected<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A company vehicle is part of the corporate image presented to the world. With driver reimbursement, whether a vehicle is appropriate to the type of image the company wants to project is determined by an employee.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">On the other hand, a company-provided program allows the company to control the suitability and appearance of vehicles used for the business. When an employee provides the vehicle, the company surrenders this control. The wrong vehicle can send the wrong message to customers.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">If the company doesn\u2019t provide the vehicle, it has no control over what the employee drives to a customer location. Customer perception is everything, especially when it involves prospective customers. Also, employees may be required to entertain customers and you don\u2019t want them to drive customers in an unsuitable vehicle. You need to control the image you project to both the public and customers.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Another problem a reimbursement program creates is when someone is hired who already owns a vehicle; the company will most likely have to accept whatever he or she is driving.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Many companies decide against reimbursement because they want to present a professional, uniform presence in the marketplace. If a company uses a reimbursement plan, it cannot dictate what the employee purchases.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A company vehicle projects the image that company leadership wants to present to the world. By allowing employees to choose their own vehicle, that control is lost, with the danger of the company\u2019s image being tarnished.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 6: Costs Unfairly Shifted\u00a0to Employees<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">It is more expensive for employees to use their personal vehicles for business than it is for a business to offer company vehicles. As a volume vehicle buyer, a company can acquire vehicles at wholesale cost, while employees must pay retail. Second, a company can finance a vehicle at a cheaper cost than an employee. A company also has lower vehicle maintenance costs by participating in a national account program, while an employee typically pays retail.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Companies are eligible for discounted prices for initial vehicle cost, repair, parts, and service. Plus, on occasion, they can get out-of-warranty good-will adjustments. Also available are reduced rental car rates. As volume customers, they have direct access to manufacturers for assistance with parts expediting and additional discounts.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">An employee can\u2019t possibly buy or lease a new car and operate it as inexpensively as a company. It would also be difficult to afford a retail lease with the average miles driven by fleet drivers. Most retail leases are structured for the person who drives from 12,000 to 15,000 miles per year. Even if a driver would choose to purchase the car, he or she would find out, after two to three years, that the resale value is so low, because of the high mileage, that they would be forced to keep driving that car or take a significant loss selling or trading it in.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No matter what cost category is examined, a company-provided program is less expensive than driver reimbursement. A well-run, company-provided fleet will generally reap the benefits of lower overall costs due to the economies of scale that larger volume drives. These include lower acquisition costs, lower holding costs (lease or depreciation expense), lower maintenance expense (national account pricing, specially negotiated programs on tires, oil changes, etc.), lower fuel expense, and lower insurance costs.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 7: Reimbursement Offers Less Control of Employee Safety<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Many fleets tend to equip all vehicles with current safety features. If employees are providing their own vehicle, they may not be willing to do the same. Fleets can provide, or mandate, additional safety equipment, such as barriers in minivans, to protect the driver and passengers from in-vehicle flying objects in the event of a sudden stop or collision.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Some companies also affix \u201cHow Am I Driving\u201d bumper stickers with a 1-800 number to call as part of their fleet safety program. It would be difficult to require these bumper stickers be placed on a personal vehicle.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 8: Company-Provided Fleet\u00a0Can be Less Expensive<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">For the majority of companies, it is less expensive to provide a company vehicle program. Company vehicles are acquired at a cost far lower than the retail price an individual would pay for the same vehicle. Companies can take advantage of the manufacturer\u2019s fleet incentives and allowances. Companies get excellent financing from lessors that is far better than what an individual could arrange on their own.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 9: Unused Advantages of Professional Fleet Administration<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A company-provided fleet is easier to manage with one payment to a leasing company rather than processing numerous expense reports.<\/span><br \/>\n<span style=\"color: #0000ff;\">Also, professional fleet management will make better fleet-related choices than individual drivers. They can control lifecycle costs by calculating the most cost-effective replacement cycling of vehicles.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">There are eight other advantages provided by professional fleet management:<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Expedites vehicle maintenance.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Monitors and negotiates vehicle maintenance, parts availability, service work, and scheduling.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Pursues accident reimbursement.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Serves as liaison in lawsuits resulting from auto accidents.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Audits and\/or pursues warranty reimbursements.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Audits and\/or pursues manufacturer and lessor rebates.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Responsible for keeping daily rental car rates to a minimum.<\/span><br \/>\n<span style=\"color: #0000ff;\">\u25cf Audits sale of used vehicles.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Ensures fleet reporting is consistent and in compliance with applicable tax laws.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 10: Loss of Competitive Allowance Program Monies<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Oftentimes, manufacturer fleet incentive programs, such as competitive assistance \u00a0programs (CAP), are structured based on reaching tiered volume purchasing levels. A reimbursement program, in which employees acquire their own vehicles, would eliminate a company\u2019s fleet volume and eligibility for CAP monies. Many companies have grown to rely on these monies to assist in lowering their overhead expenses.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 11: Driver May Carry Inadequate Insurance<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">If a vehicle is not provided by the company, then the company must be certain that the driver has sufficient insurance to protect it\u00a0from exposure should there be an accident while the driver is on company time. It is difficult to confirm a reimbursed driver\u2019s compliance with a company\u2019s insurance requirements. Some insurance companies require drivers who use their own vehicles for business to carry a certain dollar level of insurance and it is an additional administrative expense to ensure compliance.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">If a personal vehicle is used for part of his or her job, the employee needs to carry \u201cbusiness\u201d insurance, which costs approximately twice as much as personal insurance. If the employee is involved in an accident and does not have \u201cbusiness\u201d insurance on the vehicle, the carrier for the personal insurance can deny the claim on that person\u2019s incurred loss because the driver had not advised the carrier he or she was using their personal vehicle for business.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">When liability insurance premiums are paid by the company, there are no surprises on coverage or payment. With driver reimbursement, the driver may not carry adequate liability insurance, which puts the company at increased risk.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Minimum established limits of liability should be established if personal vehicles are used. Someone internally must track this, as well as renewals. Also, the \u201cbusiness use\u201d class of personal car insurance could increase the premium, as could annual miles.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Other areas would include insufficient insured\/underinsured coverage, rental reimbursement, and towing. Companies should also require such insurance to be obtained from financially solvent insurers. Plus, this would require an administrative expense and overhead to get evidence that the coverage has been actually purchased.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">While some companies offer reimbursement as a way to limit liability exposure, this may not protect the company from a lawsuit as a result of a crash.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 12: Reimbursement Still Requires Monitoring Employee MVRs<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Company-provided vehicles offer a better opportunity to monitor driver behavior by a required annual DMV check. Even with a driver reimbursement program, a company should still monitor MVRs. Otherwise, how would you know if someone is driving for a company without a valid license or with a DUI conviction?<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No matter which vehicle provision is used, companies should make sure that drivers have acceptable MVRs as outlined by the underwriting departments of the carriers and those MVRs are updated at least yearly or more frequently.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 13: Increased Temptation to\u00a0Defraud the Company<\/span><\/h2>\n<p style=\"text-align: justify;\">\n<figure class=\"article-img float-margin\" style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><img class=\"wrapImageCMS aligncenter\" src=\"https:\/\/fleetimages.bobitstudios.com\/upload\/global-fleet-management\/content\/article\/2021-09\/maintenancecar-__-720x516-s.jpeg\" alt=\"Many fleets tend to equip all vehicles with current safety features. If employees provide their own vehicles, they may not be willing to do the same. - gettyimages.com\/wavebreakmedia ltd\" \/><\/span><figcaption class=\"caption-description\">\n<p style=\"text-align: center;\"><span style=\"color: #0000ff;\">Many fleets tend to equip all vehicles with current safety features. If employees provide their own vehicles, they may not be willing to do the same. <\/span><span style=\"color: #0000ff;\">gettyimages.com\/wavebreakmedia ltd<\/span><\/p>\n<\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Reimbursement opens the door for the padding of business mileages in order to increase allowances. Typically, drivers keep poor records of where they drove and for what reason, so companies often reimburse without actually knowing whether it was for business mileage. In the long run, it\u2019s much easier to account for personal use (by tax implication or other method) than to make sure you are not paying a higher cents-per-mile rate for possible personal use. The cents-per-mile on reimbursement, which the IRS raises annually, can be higher than the cost-per-mile cost of having well-managed fleet vehicles.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Also, some employees may attempt to get reimbursed for unauthorized expenses and there may be a deception of the true operating costs. It takes time and labor to monitor against these abuses.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 14: Employee Gets a \u2018Pay Cut\u2019<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">The cost of gasoline, insurance, personal property tax, registration fees, and maintenance of vehicles vary substantially. It is rare that a company reimburses mileage at a rate that fully compensates a driver for the actual cost of operating a vehicle. The driver ends up with a reduction in pay because he or she now has to make up the difference between the reimbursement amount and the actual cost of operating the vehicle.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Also, there are geographic inequities to a reimbursement program. One of the biggest problems with driver reimbursement is establishing an equitable rate for everyone due to geographical areas, territory size, and types of driving.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 15: Added Tax Burden for Drivers; Potential IRS Audit<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">If not handled correctly, reimbursement can be considered taxable income by the federal government and by some state tax authorities. Car allowances are taxable to the employee and the company is subject to its portion of FICA tax.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">On average, the employee\u2019s combined state and federal tax burden will increase, which amounts to a direct reduction in salary.\u00a0In addition, reimbursed employees may be subject to possible IRS audit since mileage expense is auditable.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 16: Loans to Cash-Strapped\u00a0Employees for Vehicle Repairs<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Here\u2019s a question to ask yourself: Will the reimbursement provided by a company to an employee driver be used for a vehicle or to make a college, mortgage, health, or home insurance payment?<\/span><br \/>\n<span style=\"color: #0000ff;\">Often, salespeople whose job requires their use of a vehicle are recruited straight out of college. At this young age, many employees have little or no credit history, often no cash for down payments, and little\u00a0experience in buying or leasing cars.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Many fleet managers report that these younger employees often need the comany to be a co-signer of a loan and lease. Other fleet managers report that sometimes employees run short of cash and have to ask the company for a loan to repair their personal vehicle to continue working. One fleet manager related a story about a driver whose transmission failed and the rep did not have the money for repairs or a replacement rental vehicle. The company loaned him the money to make the repair.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 17: High-Mileage Drivers Upside Down in Reimbursement<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">High-mileage drivers will usually be upside down at the end of a lease with a balloon payment due for over-mileage.\u00a0When the driver leases a vehicle in a closed-end lease, excess mileage charges can be expensive.\u00a0Replacement cars are needed sooner because they quickly accumulate high mileage, but negative equity prevents employees from doing so unless the company intervenes with special compensation assistance.\u00a0The extremely high mileage driven by employee drivers, an average of 20,000-30,000 miles per year, would preclude many from obtaining a personal closed-end lease.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 18: Many Employees Buy Least\u00a0Expensive Vehicle<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Often, drivers seek the lowest payments possible through longer terms because they think they can \u201cmake some extra money\u201d by doing so.\u00a0If you allow employees to buy their own vehicles, some of them will buy the cheapest vehicle they can, so that they can try to make money from the company allowance. Also, drivers do not always replace vehicles on a timely basis.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 19: Company Loses Dividends from Resale Profit<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">In a strong used-vehicle market, the additional revenues derived in the resale of a company vehicle go straight to the company\u2019s bottom line. This revenue source, albeit unpredictable, would be lost in reimbursement.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 20: Eliminated Perk of Buying\u00a0Used Company Vehicle<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Employees may be interested in the benefit of buying their assigned vehicle when its useful life at the company is completed. This perk is eliminated when employees are reimbursed for their personal vehicle.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">There is also the negative impact on employee morale due to the belief that a perceived fringe benefit has been eliminated. For example, many sales and service personnel consider the purchase of their used vehicles a fringe benefit.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 21: Inability to Provide Proper\u00a0Vehicles<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A key problem with reimbursement is the inability to provide the proper vehicle for the job function. Specific fleet applications require specific types of vehicles; however, in a reimbursement program a company loses control of this. With a company vehicle ,you are able to make vehicle modifications and enhancements to protect the driver and cargo.\u00a0Service vehicles often require specialized upfitting, which requires they be company-provided to maintain safety and weight standards.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 22: Inability to Monitor Condition of Employee Vehicles<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">With an employee-provided vehicle, how do you ensure it is properly maintained? With driver reimbursement, the company is not aware of the vehicle\u2019s condition and maintenance.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A key question to ask is, how are you going to monitor the condition of that employee\u2019s car? Is the motor oil being changed at manufacturer-recommended intervals, as it is done on fleet units? Are the tires in safe driving condition and properly inflated? What about the condition of the brake pads and rotors? Who will be monitoring this? How will repairs be handled?\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 23: Reimbursement Perceived as Part of Compensation<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Often, a reimbursement allowance is seen by the employee as part of his or her personal income. When it is time to replace the current vehicle, the employee may resent the outlay of a large sum of money.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 24: Inability to Regulate Personal Use of Employee Vehicles<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">With driver reimbursement, there is an inability to restrict who can drive a vehicle. For instance, with some industries, it is important to regulate who can drive the car (such as no one other than an employee and spouse) because, as is the case with pharmaceutical companies, some of these cars may contain drug samples.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 25: Reluctance to Perform\u00a0Certain Jobs<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">With a company-provided vehicle, you have greater assurance in knowing it will be used for company business rather than having a truck rented because an employee does not want to damage the inside of their own vehicle.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 26: Issues with Policy Compliance<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Under a reimbursement program, a company still needs to set up policies and guidelines regarding the use of their personal vehicle to conduct company business. The administrative burden to monitor compliance would be excessive. What do you do if an employee is not complying with the rules for their personal vehicle?<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">In the final analysis, companies offering reimbursement end up with an inconsistent mix of fleet vehicles and fleet policies with mileage and financing terms that make it impossible to manage equitably.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 27: No Transferring of Vehicles\u00a0Between Employees<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">A company-provided vehicle fleet has the ability to transfer vehicles to other employees, which is lost in a reimbursement program.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 28: On-Vehicle Advertising Missed Opportunities<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Another reason companies frown on employees using their personal vehicles in their job is because of the inability to advertise the company on their personal vehicles.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 29: Reimburse Deductibles for Non-Business Accidents<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Many fleets that offer company-provided vehicles don\u2019t charge drivers the cost of a deductible should an accident occur. Under reimbursement it would become more common for companies to reimburse employees for the insurance physical damage deductible for an employee vehicle involved in an accident while performing work-related business. However, increased administrative oversight would be required to ensure that the accident occurred during a business usage.<\/span><\/p>\n<p style=\"text-align: justify;\">\n<h2 style=\"text-align: justify;\"><span style=\"color: #0000ff;\">No. 30: Some Regulations Prohibit\u00a0Use of Personal Vehicles<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Some businesses, such as pest control companies, are prohibited by EPA regulations to allow anyone to carry chemicals in their personal vehicle without the proper storage away from the passenger compartment. The same would be true with vehicles without a lockable truck making them unable \u00a0to carry pharmaceutical samples.<\/span><\/p>\n<p class=\"original-url\">Originally posted on <a href=\"https:\/\/www.globalfleetmanagement.com\/10152671\/the-negative-consequences-to-driver-reimbursement\">Global Fleet Management<\/a><\/p>\n<p>by <a href=\"https:\/\/www.automotive-fleet.com\/authors\/10140586\/mike-antich-1\">Mike Antich<\/a><\/p>\n<p><span class=\"posted-by\">Source: <a href=\"https:\/\/www.automotive-fleet.com\" target=\"_blank\" rel=\"noopener noreferrer\">https:\/\/www.automotive-fleet.com<\/a><\/span><\/p>\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<div class=\"g-cols wpb_row type_default valign_top vc_inner vc_custom_1585038969469\">\n<div class=\"vc_col-sm-12 wpb_column vc_column_container\">\n<div class=\"vc_column-inner\">\n<div class=\"wpb_wrapper\">\n<div class=\"w-post-elm post_content\">\n<h1 style=\"text-align: center;\"><a href=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/who-we-are\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>KNOW WHO WE ARE<\/strong><\/a><\/h1>\n<p><a href=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/who-we-are\/\"><img loading=\"lazy\" class=\"aligncenter wp-image-11695\" src=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-300x150.jpg\" sizes=\"(max-width: 430px) 100vw, 430px\" srcset=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-300x150.jpg 300w, https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-1024x512.jpg 1024w, https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-1536x768.jpg 1536w, https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-2048x1024.jpg 2048w\" alt=\"\" width=\"430\" height=\"215\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>gettyimages.com\/geber86 Some corporate managers feel an employee reimbursement program costs less than offering company-provided vehicles. Shifting the burden of the company vehicle program to employees may seem, at first, to be the ideal way to accomplish cost reductions. But a closer examination shows this may not be the case. If your company spends less by&#8230;<\/p>\n","protected":false},"author":3,"featured_media":12583,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[133,438],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/12582"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=12582"}],"version-history":[{"count":1,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/12582\/revisions"}],"predecessor-version":[{"id":12584,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/12582\/revisions\/12584"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media\/12583"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=12582"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=12582"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=12582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}