If not handled correctly, the expense approval process can be a huge source of consternation for everyone in an organization. When not handled properly, the road of mileage reimbursement can be a long and slow one, due to everything from bottlenecks, to forgotten or misfiled reports, to long waits for management and supervisors to move requests from one stage of approval to another. When company reimbursement for mileage traveled by mobile employees isn’t handled quickly and efficiently, everyone in the organization suffers. Here are some ways lengthy reimbursement processes can hinder your business, and some ways tightening up reimbursement can be a boon to your workplace.
For Your Employees
When company reimbursement for mileage traveled on the job is done in a timely manner, employees see all kinds of benefits that in turn help strengthen them and their commitment to your business.
Time is money, and employees are more likely to do their jobs well and with a high level of dedication if they know they’ll be compensated for their time in an efficient and timely manner. For many employees who spend a lot of time traveling in their personal vehicles as part of their job duties, especially employees in the home health care industry, receiving timely reimbursements can help ease a lot of stress. If they don’t receive reimbursement for their work travel on time, they could have problems when it comes to buying essentials such as gas and groceries.
Timely company reimbursement for mileage can also be important for legal reasons. Mileage reimbursement is important to making sure that employee pay doesn’t fall below the federal minimum wage. When employees whose hourly wages already hover close to the federal minimum don’t receive mileage reimbursement, the reimbursement amount is subtracted from their wages to cover the costs of operating their vehicles. This could bring them under the federal minimum wage, potentially putting your organization in legal jeopardy.
When things aren’t running smoothly, it’s stressful for everyone. Add a financial element, and that just compounds the stress. Employees want to be seen and recognized for their hard work, and not reimbursing them for their travel in a timely way may indicate that they aren’t being appreciated or respected. They may even feel like their employer is taking advantage of them. Employees who can rely on being reimbursed for their job duties in an efficient manner are more likely to be satisfied and dedicated while performing those duties.
Stressed, worried, or disgruntled employees don’t do their jobs better than happy ones. How productive and useful will your employees feel driven to be, if they don’t feel supported by a system that’s supposed to be reimbursing them for their hours of travel and hard work?
For the Business
While the employees are the lifeblood of any business, ensuring that company reimbursement for mileage compensates mobile employees for their work travel in an accurate, fast and efficient manner will also hugely benefit the organization as a whole.
Financial Losses and Lawsuits
If your organization doesn’t stay on top of mileage reimbursement payments, the organization could suffer both financially and legally. If the company issues reimbursement payments too late, that payment may not fall under the guidelines for the IRS accountable plan, meaning that the payment would be taxable just like wages, instead of remaining tax-free.
Failure to compensate employees quickly may also result in legal trouble. Federal law does not require that employers have to reimburse employees for expenses incurred when employees use their vehicles for business purposes. However, as mentioned above, under Fair Labor Standards Act (FLSA) regulation, lack of compensation could bring employee pay under minimum wage, which can and has resulted in legal action. In a recent North Dakota lawsuit, Papa John’s Pizza delivery drivers sued for not being reimbursed at the IRS standard business mileage rate.
In 2008, Starbucks paid up to $3 million to settle a lawsuit alleging the company was not reimbursing its California employees for mileage expenses they incurred while on the job. (Along with Massachusetts and Illinois, California is one of the few states that legally requires employers to reimburse employees for mileage expenses).
Paying attention to employee needs is a motivation for those employees to want to keep their jobs, and compensation for their work is pretty high up there on the list of your employees’ needs. If your organization can’t be trusted to handle company reimbursement for mileage those employees might take their work elsewhere. The possibility of higher turnover could impact management and supervision as well.
Lower Employee Performance
Or, if they don’t leave, employees might simply start turning in less and less motivated job performances. If they know that something’s not right in the state of your organization’s mileage reimbursement system, they might start fudging their mileage totals, get sloppy with their trip logging, or stop logging their travel for mileage reimbursement altogether. Additionally, employees who know that their organization isn’t carefully monitoring work travel for the sake of mileage reimbursement may be more likely to report non-work-related travel, or make up trips altogether.
Keep it Moving With CompanyMileage
Sluggish mileage reimbursement timelines can be a hindrance to your organization on every level. At CompanyMileage, we offer an entire suite of software, SureMileage, SureMobile, and SureExpense, designed to automate mileage reimbursement so that you and your employees can enjoy a quicker, more streamlined and efficient process.
Using the SureMobile app, employees can log their work-related travel from their smartphones, taking a few minutes every day to organize trips and receipts before electronically submitting expense reports for review. After they’ve been submitted, those reports move through an automated, customizable workflow so that they can be reviewed and approved as soon as possible. After approval, CompanyMileage’s software integrates easily with any major accounting and payroll systems, so employees can receive their payments in a timely way.
Don’t let mileage reimbursement slow you down. Request a demo with CompanyMileage today, so we can help you pick up the pace, and help you better serve your business.