3 Reasons to Reconsider Employee Mileage Reimbursement

Business car and truck fleet leasing services give you the flexibility to tailor each of your vehicles to meet the exact requirements of your company’s needs and objectives while improving your cash flow and lowering your monthly payments.

It’s common to want to compare the benefits of leasing a fleet vehicle vs. buying it. The response you will hear to this question is that leasing simply lowers the monthly cost of a vehicle.

While this is certainly true, the benefits of leasing your fleet vehicles go far beyond just lowering the monthly cost of the vehicle including tax savings, reduced maintenance costs, and less waste. Leasing also aligns well with economic life cycling, resulting in the ability to operate a more current fleet of vehicles.

1.      Driver Reimbursement has short term benefits & long term complications

Though driver reimbursement may provide a simple solution for employee business travel, it shifts the burden onto the employees you count on, while depleting their ability to professionally represent you in the process.

Driver reimbursement is often more expensive and can become an HR nightmare.  Many companies who reimburse for business travel are spending 20% more on travel reimbursement compared to a fully managed fleet program.

Most employees will also see vehicle reimbursement as additional income creating problems where your employees do not save for repairs or safety items and have instead use vehicle reimbursements for other purposes (like college loan, mortgage, health, or insurance payments).   

It can be very difficult to distinguish whether driver reimbursement is being used for business or personal use. After a short period of time, all of these start to add up. Before you know it, your bottom line, retention, recruiting and image could suffer. 


2.      Managing insurance liability becomes a challenge

Many companies are under the misunderstanding that providing a car allowance or reimbursement for travel saves them from potential liability or insurance exposure.

While it’s true you can avoid the lesser expenses of damage because the employee’s insurance is primary, you may still be responsible for covering the costs exceeding that employee’s coverage. This requires taking the tedious extra steps to make sure that each employee has sufficient insurance to cover any liability exposure while driving on company time on an ongoing basis.

You are also accepting the added risk that comes with being unable to monitor or maintain the vehicles your employees are using.

With a company-provided vehicle, you can control maintenance variables (see our Fleet Maintenance and Repair Management program) and minimize liability exposure—all while improving employee morale and relations. In the case that an accident does occur with a company vehicle, we offer 24-hour roadside assistance and help from trained accident reporting specialists as part of our Fleet Accident Management services. 


3.      Leasing fleet vehicles can boost employee morale

Requiring employees to use their own vehicles for work creates a divide between them and the company they represent. It introduces a potential disagreement, opening the door to resentment, and leading employees to exploit your reimbursement programs to get their desired compensation.

As any successful business person will tell you, if the employees turn against the company, the company fails. So why risk it? Relatively, it’s more expensive for an employee to use their own vehicle for business than it is for the business to provide a company vehicle for them.  Businesses working with Ewald Fleet Management have much stronger purchasing power, lower funding rates on average as well as a managed maintenance and fuel program. 

This not only provides savings for your organization, it shifts the burden off of your employees. Your short-term benefit from personal vehicle reimbursement would be costing your employees more than it would cost you to save them from the burden. Instead, trust that an investment in your employees is an investment in your business.

Most employees prefer a company vehicle because it makes them feel like their company genuinely cares about them and is willing to support them in the field. It’s a status symbol that can boost morale, and provide a greater sense of belonging. All of this can drastically reduce your employee turnover, and attract top talent!

You will retain high-quality employees who are promoting a better representation of your company. It can be the difference between a degenerative measure for temporary savings, and an investment in your team for substantial future growth.

Make the switch away from employee mileage reimbursement today – Contact Ewald Fleet Solutions to see how we can simplify your company vehicle situation.

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