You want to build a mileage reimbursement program that saves your company money and time, promotes compliance and will actually be used by employees. Here are some best practices for business mileage reimbursement programs.
What To Look For In A Business Mileage Reimbursement Program
Your mileage reimbursement program needs to be accountable, simple and compliant. A manual process fundamentally can’t achieve these goals.
Let’s dive into each of these elements and how they apply to your business.
Mileage Reimbursement Programs Are Accountable
A great mileage reimbursement program promotes accountability throughout the organization. Businesses know they’re paying out the proper amounts and employees know their expense reports will be approved in a timely manner. Consider the following:
- 34.5 percent of employees admitted to padding their mileage when it came to expenses.
- Of those admitting it, 76 percent said they were able to do it because their companies handle expenses manually.
- Some employees deliberately try to commit fraud. But, the majority of workers pad mileage because it’s easy to do with a manual reporting process.
A manual process also eats into the time employees could be used for more valuable work. A Workfront report found employees spend 11 percent of their work week on administrative tasks. That’s more than 4 hours per week wasted. If you’re a salesperson, you want to be closing deals or working on your pipeline, not spending hours on keeping a mileage log.
An automated mileage reimbursement program ensures accountability. It removes most fraud and eliminates even the temptation to claim extra mileage. It frees people from annoying chores so they can focus on their jobs.
Ultimately, having accountability in your mileage reimbursement program improves your bottom line by making reimbursements accurate and efficient.
Mileage Reimbursement Programs Are Simple
Your mileage reimbursement program needs to seamlessly fit into the way you and your employees do business. If it’s not easy, it’s going to fail.
You want simplicity in your solution so your employees will actually use it. That means your mobile workforce shouldn’t have to spend much time learning and using your solution. Likewise, it should fit with your existing reporting and payroll tools. Lastly, you want something that can be deployed in days, not weeks or months—every day you’re waiting for your tool to roll out is lost money and productivity.
The key is to make your program simple without sacrificing aspects important to your business. You want an easy-to-use solution that still includes:
- Standardized, digital reporting that integrates with your existing business software.
- Accurate mileage tracking that doesn’t impose extra burdens on workers.
- Security and privacy policies you can rely on.
- World-class support in case something goes wrong.
Having a simple, yet powerful solution is ultimately about increasing the productivity of everyone involved. Let them concentrate on activities that really add value instead of managing mileage.
Mileage Reimbursement Programs Promote Compliance
There are legitimate compliance issues at stake when it comes to a mileage reimbursement. Your business must comply to all applicable reimbursement and labor laws. You also want bulletproof records in case the IRS or financial departments come calling.
There’s no federal law requiring a business to reimburse for mileage. But, states like California and Massachusetts do have laws on the books requiring mileage reimbursement. You may also be flirting with labor law violations by not providing a mileage reimbursement, depending on your employee wages.
These can have major consequences. Starbucks recently had to pay out $3 million to settle a mileage reimbursement lawsuit. Pizza Hut, RadioShack, Walgreens and many others have paid out millions in lawsuits related to mileage expenses.
Even if you never face a lawsuit or an IRS audit, you’ll want standardized records for an inevitable financial audit. Businesses of all sizes routinely have their books checked by internal or external auditors.
Compliance is never a thrilling part of business but it’s much better to get ahead of it in an organized way. Otherwise, it could snowball into a series of audits or lawsuits.
How MileIQ for Teams Can Help Your Business Mileage Reimbursement Program
MileIQ for Teams is used by businesses of all sizes to build effective mileage reimbursement programs. With automatic tracking, an elegantly designed interface and world-class support, it’s an ideal way to let your employees focus on their work, not manually logging miles.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.