Three Keys to a Smooth Transition to a FAVR Vehicle Reimbursement Program from Company Cars
Change isn’t easy for some people. In our experience, when it comes to moving from company cars to a vehicle reimbursement program, 1/3rd of drivers will be pleased, 1/3rd will be neutral and 1/3rd will question the new plan. We also know that the transition goes more smoothly when you can prove that employees benefit from a vehicle reimbursement program (VRP), and that mileage logging is positive for the business.
So, if you are evaluating the switch to a vehicle reimbursement program, what can you do to make it happen painlessly? How can you maximize the benefits without jeopardizing trust, morale and productivity?
We’ve identified three overarching pillars supporting the process during the 20 years that we’ve been helping companies transition to a fixed and variable rate (FAVR) or other VRP. Recognizing that this is a “transition” and not an abrupt switch is a subtle but important distinction; from both financial and company culture perspectives, a measured, thoughtful move is most effective. When you can do that, even the naysayers will have little to grouse about.
It’s no surprise that step one is to set up a timeline, map out the tasks and identify the stakeholders involved in the implementation process. The surprise? It’s probably more detailed than you expect. Our administrative process covers everything from training your managers and administration personnel, to electronic funds transfer and teaching drivers how to use our Mi-Route app to track and report mileage data.
One part of the plan is establishing vehicle profiles, so you have a baseline for FAVR reimbursement appropriate for the type of car your drivers need in their role. For example, road-warrior sales representatives can be placed in a mid-size sedan profile, which is good for highway travel and fairly fuel efficient, and easy to park. Service representatives probably need something bigger, so a crossover that will carry cargo makes sense. Sales managers and executives warrant a full-size vehicle that enables transporting clients in comfort.
Maybe your company makes sustainability a priority. In that case, we could determine the profile for hybrid or electric vehicles of varying size and capability. By setting a standard for the company and giving drivers options, you control costs and empower people. And everyone likes that.
When should you sell the company cars? How about the timing of surrendering gas cards, if you have been supplying them? What about giving employees the option to buy the car they’ve been using? There’s much to be considered when moving a company asset from one status to another. We’ll help you determine the guidelines for the transition, making sure the company gets maximum value from fleet cars and the shift is fair to all employees.
Nothing assuages the fear of the unknown better than honest messaging and transparency. Our expertise includes developing the communications to managers and employees that convey the benefits drivers will realize – and the fact that personal use is not reimbursed.
We’ll help you communicate via email, launch letters and by working with you to define and convey the company VRP policy. Typically, we point out that employees will enjoy tax savings, that the equity in the vehicle now belongs to them, and that they can choose a vehicle which fits their personal lifestyle. We’ll include details on how reimbursement relevant to the vehicle profile works, so drivers can make an informed decision on the vehicle they choose.
Once your program has been launched, we’ll help with questions. When you engage us, we assign a team, including a Client Service Associate, Special Services Coordinator and Account Executive, that’s dedicated to your company. You can count on us for advice and guidance on every aspect of your plan as well as the technologies we give you to track and report business mileage.
We’ve developed a concise yet comprehensive document that will give you more details on our process and services. You can download “Transitioning from COMPANY CARS to a Vehicle Reimbursement Program” HERE.
What concerns do you have? We welcome your thoughts and look forward to helping you make a transition that can control operational costs, reduce liability and exposure, and keep all employees happier during the process and beyond.
About CarData Consultants CarData provides precision vehicle reimbursement programs for the mobile workforce. CarData services save money, reduce risk, and remove administration. CarData programs are compliant with the IRS and the CRA procedures.