The Benefits of Switching to Direct Pay

One of the most well-received aspects of adopting a vehicle reimbursement plan is the practice of direct pay. The IRS and CRA compliant reimbursement is tax free and will be conveniently deposited into a driver’s checking or savings account. The benefits of switching to direct pay can be seen by both the individual drivers and the organization itself.

For drivers, the benefits can be felt directly in their respective wallets, since direct pay reimbursement allows them to receive reimbursement for expenses with ease. However, for organizations, the merits of making the switch are multifaceted. Direct pay will impact an organization’s business in three distinct ways:

Audit Control

Direct Pay provides an electronic payment trail, while requiring only a single payment per month. Multiple review and audit tasks are performed by CarData’s Direct pay administrator and by the client coordinator.

This reimbursement method removes the need for paper check stock and mailing. It also eliminates the hassle of dealing with stopped payments and returned checks, as well as the threat of check fraud.

Separation from Payroll

Direct pay makes a clear distinction between reimbursement and compensation. There is no need to integrate reimbursement with the payroll system and no need to calculate taxes.

Reduction of Administrative Work

Reallocate vital human resources with the reduction of administration time required with direct pay. All that’s needed is a single monthly payment to CarData  to cover all drivers under the plan. And there is no need to manage inquiries from employees – CarData does that.

A look at how direct pay works

  1. Drivers complete a direct pay profile
  2. Payment is calculated for each driver, on the 1st of the month
  3. The driver’s business mileage is audited and approved
  4. Monthly reimbursement amounts are checked for accuracy
  5. The amounts are audited through the use of enhanced checks and balances
  6. The client transfers the total reimbursement to the plan provider
  7. Payments are distributed  to each driver’s bank account via electronic transfer

To learn more about the benefits of switching to direct pay reimbursement, please contact CarData by phone at 1-866-550-5188 or via email to info@cardataconsultants.com.