The Impact of Switching to a VRP on Corporate Cost Cutting
Considering a switch to a vehicle reimbursement program as a cost cutting measure, but not sure how doing so will impact your drivers, vehicles, and general efficiency? Making any major change to your company can cause quite a bit of upheaval, so it’s important to understand the impact you’re making well in advance of making that change. Fortunately, a VRP offers enough benefits to allay any downsides—and what’s better than cost cutting while gaining efficiency in the exchange?
At its simplest, a vehicle reimbursement program serves the cause of cost cutting by eliminating overpay by dynamically adjusting reimbursement to match the market, geographic regions, and other variables inherent to the industry—variables that flat car allowances, cents-per-mile payments, and other transportation solutions do not adequately adapt for. For reference, those using company car programs often find themselves overpaying as much as 30%, a huge number to have eating into profits.
A VRP also allows for cost cutting by matching the needs of your drivers and your company more precisely than alternative options. If your company often faces large changes in transportation needs–the size of your driving staff, the distances travelled, the vehicles required—then the inherent flexibility and scalability of a reimbursement program becomes far more valuable and effective than an in-house or rented fleet.
Reduce Investment Expenses
Compared with fleet management arrangements or purchasing and owning company cars, a VRP is a great method for cutting costs on the front end, immensely reducing the expenses associated with owning, renting, maintaining, and otherwise assuming direct responsibility for driver vehicles as part of your transportation methods. By cutting costs required for investment, investments can be made elsewhere to improve your bottom line—and your flexibility as a company skyrockets.
Administrative Cost Cutting
Other methods of reimbursement and fleet management also generate more manual input than the relative simplicity of a VRP. You might be cutting out the need for in-house maintenance teams, the documentation of such maintenance and upkeep, and other associated paperwork. Altogether, a move to a VRP will almost inevitably reduce administrative and other overhead dramatically.
Under most solutions for company transportation, the companies remain exposed to liability all hours of the day, whether the driver is on the clock in their vehicle, headed home, or on personal time in the fleet vehicle. Insurance costs are set accordingly under these schemes. With a VRP, however, that 24/7 liability can be dramatically reduced to working hours alone, with an associated reduction in insurance costs.
Improve Driver Efficiency
Vehicle reimbursement programs offer a unique benefit to morale and general efficiency over fleet management and company-owned systems by allowing drivers to choose the vehicle they’re most comfortable with. By relinquishing this decision to the drivers, you gain the simple efficiency of letting your salespeople choose what is right for them and their personal circumstances, reducing the expenditures which inevitably arise when drivers are given carte blanche with a company vehicle.