Lease vs. Reimbursement Case Study
A quick look at how a client saved over 32% by switching to a managed lease program from reimbursing employees.
Our client, a manufacturing company, was reimbursing their 20 sales employees for business miles based on the suggested IRS mileage reimbursement rate. Their salespeople were averaging 2,500 miles per month and were reimbursed at a rate of $0.535 cents per mile.
The client had not reviewed their reimbursement policy for several years. During this time, their salespeoples’ travel had increased. As a result, sales expenses were increasing significantly, and the client knew that there had to be a more cost-effective way for transportation.
Ewald Fleet Solutions analyzed the client’s current method of reimbursement against other options. The recommendation was made to provide vehicles to the employees under a fully managed lease program that included maintenance and fuel management. A key component with the managed program was that it allowed the client to outsource nearly all administrative and paperwork functions to Ewald Fleet Solutions. The company now provides each of their 20 sales employees a mid-size sedan through a managed program structured at 25,000 miles per year and a 3-year term.
The shift from reimbursement to providing company vehicles is saving the client over 32%! Expenses were reduced from an average of $1,337.50 per driver for reimbursement to $902.88 per month for a fully managed vehicle program, including fuel, maintenance, and insurance costs. This equates to over $104,000 in annual savings!
The costs are provided in the chart below.