Top Concerns About Company Car Plans
When considering the issue of transportation for your organization, it’s most important to understand the various problems one might encounter with any plan; company cars, fleet management, vehicle reimbursement – each raises its own series of concerns for any savvy manager. By understanding those problems, the solutions offered by each strategy, and the best way to navigate them for your company’s needs, you’re certain to come out ahead in profits, team morale, and every other metric. Here are five of the most common concerns raised when discussing transportation strategies:
1) Reducing expenditures
The first concern of anyone looking at company car or vehicle reimbursement plans is, of course, cutting expenditures without sacrificing anything else. This is a primary driver for many businesses moving from company car and fleet programs to a fixed and variable rate vehicle reimbursement solution. Fixed and Variable frequently ends up being far cheaper and offering superior results, better morale, and less waste.
Much of the waste in transportation solutions comes from places such as maintenance expenses, paying for personal gas or the cost of accidents, all of which become less of an issue when the company doesn’t directly own any cars.
2) Minimizing exposure
A second major concern when looking at transportation strategies must be liability; taking into account insurance costs. This is a major complaint against company-owned vehicles, as they typically expose the company to greater liability, especially when the vehicles go home with employees. The difference in expense and exposure between a 24/7 company car and an ‘on-shift-only’ employee car is quite clear. Many companies find they cut their exposure to as little as a third of what it previously was by forgoing company car and fleet management solutions.
3) Cutting administration
Administration makes owning cars a headache above and beyond anything any company wants to take on. When you own a fleet, you’re “in the car business” whether you like it or not; maintenance, insurance, replacements, upgrades, and the additional paperwork and resources deployed to manage the fleet. While no solution is admin-free, fixed and variable rate reimbursement strategies result in far less in the end.
4) Avoiding Bad Behavior
One of the major concerns of a vehicle reimbursement plan comes from the possibility of encouraging sub-par behaviors from employees. For example, paying too much per mile might encourage longer, more inefficient routes. Paying too little per mile might discourage drivers from driving even when it’s in the company’s best interest. Companies looking to change their method of reimbursement need to consider how they’re going to deal with this problem; in most cases, the solution is a fixed-and-variable rate vehicle reimbursement plan, which marries fixed rate payouts for fixed expenses and variable-rate payouts for variable expenses. The result is a Behavior Neutral solution.
If you’d like to learn more about company cars, a vehicle reimbursement plan, and other aspects of company transportation strategies, be sure to check out the CarData Learning Center. It has everything you need to make the best transportation choices possible for your organization’s bottom line and ability to reach its goals.