Providing a Company Car vs. Mileage Reimbursement

In a vehicle reimbursement program, employees are reimbursed for driving expenses that are work-related. Because travel expense can be costly, management may sometimes consider whether it would be more cost-effective to provide a company car rather than to continue to reimburse individual employees for the use of their vehicles. Or if a company car is already provided, it may be advantageous to consider transitioning to the use of personally-owned vehicles.

It’s not an easy decision to choose between providing a company car or reimbursing employees for using their personal vehicles. There are both advantages and disadvantages to choosing a vehicle reimbursement program over providing a company car for employees that have to travel for business purposes.

Pros and Cons of a Vehicle Reimbursement Program

A vehicle reimbursement program is a lot less costly than purchasing and maintaining a company car. A company car continues to cost your organization money even when it is sitting in the parking lot. Owning a company car leads to expenses for insurance, maintenance and fuel in addition to the cost of purchasing the vehicle in the first place. There could be additional expenses for storing a company vehicle when it’s not in use.

Providing a company car also increases your liability exposure, because any damage caused by a company vehicle becomes the responsibility of the company. If employees use their own vehicle, they also provide their own personal auto insurance. If an accident happens during business travel, the company’s insurance is usually considered secondary to the employee’s personal insurance. A vehicle reimbursement program covers the expense of mileage driven for business purposes at much less liability exposure.

Employees often prefer to drive their own vehicles and to choose a vehicle that suits their own particular needs, such as one large enough to accommodate a family or one small enough to be more fuel-efficient. Reimbursing for mileage rather than providing a company car allows this freedom of choice.

Vehicle Reimbursement Program Challenges

There are some challenges to reimbursing employees for the business use of their personal vehicles. If employees keep manual logs or spreadsheets to track mileage, the information they turn in to the accounting department may be inaccurate. It’s easy to forget to deduct for side trips that aren’t business-related, or to forget to log odometer readings at all

CompanyMileage offers a simple solution to these mileage reimbursement challenges.  Using our automated software, employees simply report their starting point and destination, and the software calculates the amount to be reimbursed. No more inflated or inaccurate travel expense report, and no need to provide a company car.

Contact us today to see how our vehicle reimbursement program can work for your company.