While the COVID-19 pandemic abruptly interrupted business travel, the latest mileage trends report from SAP Concur partner Motus shows a gradual uptick in cars returning to the roadways. Although the pace of growth has slowed in recent weeks, business mileage activity is hovering at around 54% of “normal” pre-pandemic levels – a positive indicator of business recovery, and a reminder that having the right vehicle program is critical to accommodating the return of your mobile workforce.
An effective vehicle program simplifies life for those on the road, improves productivity for those managing it, and reduces risk for a business. Determining the right program, however, isn’t a simple task for organizations with high-mileage drivers. Location alone creates significant variances in accounting for the costs associated with driving and maintaining vehicles. The American Automobile Association reports as much as a 175% difference between the lowest and highest fuel prices across all 50 states. The same is true for vehicle insurance premiums, which can vary greatly according to region.
Key findings from the 2019 Motus Benchmark Study (a survey of more than 2,000 organizations and 25 industries to collect financial, operational, and program-specific data points to provide trends and comparisons on mobile workforce reimbursement programs), also show the complexity and risk inherent to traditional vehicle programs:
- Average vehicle program cost per mobile worker increased 5% year-over-year
- 70% of organizations with vehicle allowance programs have not reviewed their allowance amount within the past 12 months
- Mileage reporting fraud cost U.S. organizations roughly $665 Million in 2018
- Fuel accounted for 25% of the costs to own and operate a vehicle in 2018
- 88% of organizations do not measure employee satisfaction with their business vehicle program
Traditional vehicle programs – flat car allowances, cents per mile reimbursement, and fleet owned vehicles – follow a one-size-fits-all approach that inefficiently manages cost and can leave dangerously wide liability gaps. Instead, companies must be nimble enough to adapt to changing and mobile-leaning workforce dynamics while simultaneously operationalizing vehicle program processes that:
- Reimburse drivers fairly and equitably
- Acknowledge regional cost distinctions
- Minimize corporate liability
- Save money and/or free up resources to be reallocated
- Simplify administrative tasks for employee and employer
- Ensure employee safety and satisfaction
In our next article of this three-part series on creating an effective, equitable vehicle program, we’ll examine the advantages and shortcomings of the three most common programmatic approaches.
To learn more, watch the video below.