How To Manage Expenses With A VRP

In our tumultuous economy, cost savings and expense management strategies are on nearly everyone’s mind. Specific to businesses with traveling employees, it is especially important to consider how to manage any costs associated with employee expenses. This means taking a step back and looking into your corporate vehicles program. If you currently operate a fleet of vehicles, it bears noting that Fleet programs are the most expensive of all corporate vehicle programs. With cost cutting in mind, here is a look at how to manage expenses with a VRP.

Fixed Costs and Operating Costs

Opting for a VRP rather than operating a fleet program means reducing the fixed costs associated with providing employees with a company car. Lease payments are for seven days a week whereas VRP payments are for five days a week.

In terms of operating costs, a fleet program is responsible for paying all expenses, whether related to business or personal use. Conversely, a VRP follows a Cents-per-Mile method, meaning that only business related mileage will be reimbursed.

Business Use vs. Personal Use

There is a strong case for saying that the variable costs of a company-owned vehicle can be considerably higher than those accrued as part of a VRP. This is because a fleet vehicle is generally driven for personal transportation after work and on the weekends. This results in increased wear and tear that will require maintenance and increased depreciation. Whereas the expenses associated with a VRP are those which are apportioned to business use.

As an example, let’s think about the following scenario: If an employee decides to take the family on a weekend road trip, the vehicle will experience tire wear, oil usage, and brake wear and tear, along with various other resulting affects. If this employee is driving a company car, then this wear will have a direct impact on the company’s bottom line. However, in the case of a VRP, where only business expenses are covered, this trip will not have as much of an impact on reimbursement amounts.

To learn more about choosing a Vehicle Reimbursement Program, please contact CarData by phone at 1-866-550-5188 or send an email to info@cardataconsultants.com.