Fixed and Variable Rate (FAVR) Reimbursement Programs Explained | How To Implement a FAVR Program

company favr program mileage reimbursement

When it comes to mileage reimbursement, most companies use the standard IRS mileage rate. However, many industry leaders choose instead to implement fixed and variable rate (FAVR) reimbursement programs.

FAVR programs can be one of the most cost-effective and accurate methods to deliver employee reimbursements. Today, we will discuss what FAVR plans are and the best ways to implement one for your company.

FAVR Reimbursement Plans Explained

FAVR is a type of payment allowance. It’s designed to reimburse employees who drive their own cars to conduct business for the company they work for. The reimbursements are a combination of monthly allowance and mileage reimbursement payments.

Related: Top 5 Company Mileage Tracker Misconceptions

The allowance is in place to cover the fixed costs of owning a vehicle. The mileage reimbursement is there to cover the variable costs of operating said vehicle.

What Are These “Fixed and Variable Costs”?

Fixed Costs

“Fixed costs” generally refer to things like the car’s depreciation value, car insurance, taxes, and license and registration charges. The total amount undergoes adjustments according to the amount of time the employee uses the vehicle for business purposes.

Variable Costs

“Variable costs” refer to expenses that can change over time. This can include fuel, maintenance, and oil changes or tire changes. 

mobile employee driving car under company favr program

How Does a FAVR Plan Work?

A FAVR program follows a very precise procedure to reimburse different types of costs. Each individual employee’s reimbursement is associated with their vehicle type and location.

The driver’s zip code determines the reimbursement. This means the driver receives payments based on their mileage and the region they live in.

Regardless of the miles they travel, each employee gets a fixed amount to cover ownership expenses. They also receive a variable amount according to mileage. Each month, the cents-per-mile rate shifts as per the local fuel prices.

FAVR Plan vs. A Standard Mileage Reimbursement Plan

When an employer uses a standard mileage reimbursement program, their mobile employees must track the mileage they incurred when conducting business. They then need to submit that information to their employer.

Related: Mileage Tracking Apps Vs. Paper Mileage Logging

The employer determines the payment by multiplying their employee’s mileage by the cent-per-mile rate the business sets. On the other hand, a FAVR reimbursement program pays not only the mileage rate but also a monthly stipend. Local vehicle expense data helps in determining both amounts.

Many companies prefer this method as it ensures accurate payments when employees live in different regions. The plan comes with location-specific rates and reimburses accordingly.

If you drive your car in NYC, your reimbursement rate will differ from a driver working in North Dakota. That’s because fuel and other related costs are relatively higher in NYC.

Comparing FAVR to Standard Reimbursement Plans

Compared to a standard mileage reimbursement plan, FAVR programs are often more accurate as they take into account actual vehicle expense data available locally. This is why FAVR programs tend to avoid both overpayments and underpayments.

To put things in perspective, employees might be spending more than they receive as reimbursement. On the other hand, their employers might be overpaying them if, for example, fuel prices have decreased.

A standard mileage plan can not only put the employee at a disadvantage. The employer might also suffer in the form of overpayments in some states. Still, some employers prefer a simpler mileage-based system instead of a highly flexible FAVR plan.

It’s worth mentioning this kind of system does not consider the varying costs, such as fuel prices. In addition to this, they may not align with the region’s prices, resulting in either underpayments or overpayments.

In a nutshell, cents-per-mile reimbursement plans are a simpler (if less accurate) mileage reimbursement method. FAVR, however, is a more customized approach that considers the individual costs of each employee and is location-specific.

cars driving in road favr mileage reimbursement program

FAVR Program Requirements – Can Your Company Run a FAVR Program?

When it comes to implementing FAVR, a company must meet its requirements. This is a reimbursement plan meant for companies with their workforce spread across different regions.

Your company must employ, at minimum, five drivers, and they must drive over 5000 miles for business purposes annually.

It’s also worth noting that only US-based companies are eligible for the FAVR plan. Considering that laws in Canada, as well as in Mexico, work differently, FAVR cannot provide for employees working there.

What Types of Industries Use FAVR?

Industries that will find FAVR plans as the most favorable method of reimbursement include sales executives. Their jobs often require them to frequently travel to meet with their clients.

Related: Manual Expense Reports: The Hidden Costs

Other industries can benefit as well. Healthcare professionals who often have to visit their patients’ homes will find FAVR to be very beneficial.

In addition, in the post-COVID era, restaurants worldwide have begun to thrive on delivery services. This makes FAVR a very favorable plan for them!

How Do I Implement a FAVR Program?

Developing a FAVR program can be a months-long process. The IRS provides guidelines, but, as you might expect, they’re not exactly user-friendly.

Most companies looking to implement FAVR or other mileage reimbursement methods turn to professionals for support. That’s where TripLog comes in!

Our team of experts can help you develop the right type of mileage plan that will fit your business needs. Our comprehensive web dashboard and sleek mileage tracker app will make reimbursements a breeze.

To learn more about how TripLog’s company mileage features can save your business countless hours of labor and thousands of dollars every year, schedule a complimentary demo. You can also visit our pricing page to get started today, or try our mileage reimbursement savings calculator.

Guide to Fleet Management and Mileage and Expense Tracking

fleet management expense tracking solution uk

Why Combine Fleet Management With A Mileage Tracker?

Today, we’re going to explore how fleet management and company mileage and expense tracking solutions can help those working in fleet management operate more efficiently. In recent years, both categories have emerged, offering those running a vehicle fleet much better visibility as to how to optimise their logistics. 

Here are some common elements those in fleet management need to manage:

  • Location tracking: Where their fleet is at any given time
  • Route optimisation: Ensuring drivers are taking the shortest and most efficient route possible
  • Tax compliance: Ensuring records are accurate
  • Digital transformation: Reducing the emphasis on manual or paper-based processes
  • Fraud reduction: Ensuring that drivers are not making fraudulent claims, whether inadvertent or otherwise

Given the digital trails being left by drivers, it is now possible for companies to provide insights into the hidden cost of the above. What has emerged is that the above compounds with costs escalating significantly based on fleet size and the typical number of miles undertaken annually.

Read on to learn how the ROI on an effective fleet management and mileage and expense tracking programme far outweigh the cost.

Mileage and Expense Tracking

A mileage and expense tracking solution is an integral part of a fleet management system. Whether the company supplies a fuel card or reimburses the vehicle’s users, a mileage app will result in significant cost and time savings. After all, a mileage tracker is not just for tracking miles – it can provide an array of information to manage a fleet more efficiently.

fleet-management-solution-uk-triplog

Advantages of a Mileage and Expense Tracker

  1. Compliance: HMRC compliance (UK) as all journeys are tracked with accurate mileage to the decimal point.
  2. Tax Management: Designed to easily identify personal trips vs. business trips, and to prevent possible benefit-in-kind administration and costs.
  3. Route Optimisation: Optimise mileage routes – fewer miles translates into cost reductions, as well as less wear and tear and CO2 emissions.
  4. Time Optimisation: More efficient planning results in better utilisation of an employee’s time, including identifying idle time.
  5. Fraud Prevention: The data available from a mileage and expense tracker makes it easier to tackle fraud as well as acting as an added incentive.
  6. Financial Reporting: You get accurate KPIs including miles per gallon and costs per journey.
  7. Driver Management: Monitor driver’s behaviour faults such as harsh acceleration, heavy braking, and speeding.
  8. Flexible: Uses Advisory Fuel Rates for employee reimbursement or deduction for private use.
  9. Expense Management: Receipts uploaded including fuel, parking, and other expenses.
  10. Administration: Reduction in administration time as numerous reports available to the fleet management and finance team including a personal trips report.

TripLog can provide a mileage tracker which can be easily added to fleet tracking software.

API and Integrations

TripLog’s powerful web API provides back-end server-to-server function calls to search, retrieve, create, and modify user data. It is available to enterprise and business users.

TripLog is integrated with industry-leading tools such as ADP Marketplace, Concur, Chrome River, Emburse, QBO, Xero, Salesforce, and Freshbooks. Drivers can also connect their bank account information and import from Google Calendar and Outlook.

Summary and Conclusion

Tracking fleets of cars and tracking those cars’ mileage is something that would make sense to go hand in hand, but many companies either use outdated and inaccurate methods such as pen-and-paper, or aren’t tracking mileage at all. Combining fleet management software with a full-featured mileage tracker app is an easy way to save time, money, and headaches.

About Triplog

TripLog is a comprehensive mileage and expense reimbursement platform that increases employee productivity and accountability, resulting in significant cost savings to employee mileage reimbursement programs

With over 500,000 downloads, TripLog is trusted by Fortune 100 companies and users worldwide. Companies can see how much more they can earn with our mileage reimbursement savings calculator.

In addition to its powerful mileage and expense tracking capabilities, TripLog offers employee schedule tracking and timesheets. TripLog can be downloaded on iOS or Android, or schedule a free live web demo today.

About the Author

Parteek Singh is the Director of Marketing and Business Development at TripLog. He is a data-driven decision maker with significant experience with tech startups from ideation to build out.

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How to Prevent Fraud in Business

prevent fraud in business

The Reality of Business Fraud

In a 2016 Global Fraud Study conducted by the Association of Certified Fraud Examiners, the cost of fraud recorded by participants was $6.3 billion USD. Even by their estimates, the total global cost of fraud may be significantly higher, maybe even hundreds of times higher.

Fraud has serious consequences for the bottom lines of companies big and small. In this study, certified fraud examiners estimated that a typical organization loses about 5% of revenue due to fraud.

Related: Your Drivers May Be Overreporting Their Mileage By 28%. Here’s What You Need To Know.

Though many situations of fraud are intentional, many employees commit fraud without even knowing. Fraud doesn’t necessarily point to criminal behavior, but it does have huge real-world consequences for organizations whether or not the fraud was deliberate.

It’s important to plan for fraud and recognize it when or before it occurs. This article is about the primary ways a business can experience fraud, who commits fraud, and how to prevent fraud in business.

Who Commits Business Fraud?

Fraud can be committed by any member of an organization. Employees and managers are most likely to commit fraud, but their lack of access to larger funds in the business restricts the cost of their fraud.

While owners and executives are much less likely to commit fraud (partially because employees comprise more of a typical company), the cost of their schemes is usually much higher due to their access to large amounts of money within the organization and their ability to evade or override anti-fraud prevention methods that other employees wouldn’t have access to.

About three-quarters of occupational fraud come from just seven departments: accounting, operations, sales, executives and upper management, customer service, purchasing, and finance.

It isn’t much of a surprise that employees from the accounting department are most likely to commit fraud in a company. These employees have continuous access to financial statements and can easily falsify numbers along the way.

prevent fraud in business

What Are the Types of Fraud in Business?

Though there are a wide range of types of fraud in business, there are three primary classifications in regards to occupational fraud.

There are 3 classifications for business fraud:

  1. Corruption
  2. Asset Misappropriation
  3. Financial Statement Fraud

What is Corruption Fraud?

Corruption includes conflicts of interest, bribery, illegal gratuities, and economic extortion. This type of fraud is committed by those in positions of power. Examples of corruption fraud could be purchasing or sales schemes.

What is Asset Misappropriation?

Asset misappropriation typically involves cash, inventory, or property. This type of fraud can be committed at nearly every level of an organization.

This can range from stealing cash receipts to payroll schemes and mileage reimbursement schemes. Asset misappropriation is the most common type of fraud in business, but usually costs the least of all frauds in expenses to employers.

What is Financial Statement Fraud?

Financial statement fraud consists of under or overstating things such as revenues, asset valuations, or cheating on mileage tracking reports.

This type of fraud can be committed at every level of a company. Financial statement fraud is the least common type of fraud but usually costs the most to employers.

The Most Common Types of Employee Expense Fraud and How to Prevent Them

Employees are the most likely individuals in an organization to commit fraud. These frauds are usually small amounts through expense reports, but they can occur for a period of time, which adds up in the long run.

The Most Common Ways Employees Cheat On Expense Reports Are:

  1. Submitting personal expenses as business expenses
  2. False mileage reporting
  3. Exaggerating gratuity/tips
  4. Submitting more than budgeted
  5. Receipts for canceled or returned items

Submitting Personal Expenses as Business Expenses

A simple way to commit fraud is by claiming personal expenses as business expenses. This could include meals, fuel, vacations or trips, and much, much more.

TripLog recommendation: Require employees to submit expense reports that explain every charge with receipts.

Mileage Fraud

Another simple method of committing fraud is cheating on mileage tracking submissions. A small addition is unlikely to set off any alarm bells and may be enticing for employees.

Ditch manual mileage logs and use an automatic mileage tracker app. A GPS mileage tracking tool like TripLog will give you accurate submissions every time, reducing your potential losses, cutting down the number of employee hours spent tracking and submitting mileage, and giving you peace of mind.

Related: Manual Expense Reports: The Hidden Costs

TripLog makes company mileage tracking and mileage reimbursement an extremely simple process. Try our mileage reimbursement savings calculator to see how much your company can save!

manage employee spending

Exaggerating Gratuity/Tips

When employees are reimbursed for meals, a simple technique to skim a little extra out of the budget is by lying about tip amounts.

While the meal can be accounted for through receipts, gratuity is not always recorded. This leaves a vulnerability in the system where employees could lie about the amount given in tips to receive more in reimbursement.

TripLog recommendation: Require employees to use a credit/debit card and request receipts for every meal. Using a card every time will ensure the transaction can be tracked, reported, and checked in case of discrepancies.

Submitting More Than Budgeted

When employees are given budgets to spend on various items such as meals or travel, oftentimes management doesn’t notice when employees have exceeded their allotted amounts.

This can go unnoticed for a long period of time, leading to many small charges adding up to a large amount of money. This becomes difficult to fix when many charges pile up.

TripLog recommendation: Accountants should double-check numbers often. Make it a requirement to review budgets frequently to make sure every employee is reporting honestly.

Additional Tips for Identifying & Preventing Fraud in Business

Tip Hotlines

According to the Association of Certified Fraud Examiners, the most common detection method for organizations experiencing fraud are tips from concerned individuals. Therefore, the single most impactful method of identifying fraud within an organization is providing an anonymous hotline to report suspicious activity to the organization.

Individuals who know about fraud may not want to come forward for various reasons, including friendships, reputation, not being taken seriously, and reprimand. Whistleblowers may even be outside the organization entirely, making tipping off anyone within more difficult.

Setting up an anonymous hotline for reporting fraud removes many of the barriers to reporting and allows for more honesty in tips.

Company Debit Cards

If your organization budgets funds for employee use such as for meals or travel, a straightforward approach to preventing fraud is by providing debit cards to employees. If employees are only given the amount they are budgeted, they can’t spend more than is allotted.

Related: Why You Should Use A Mileage Tracker With Your Fuel Card

This also allows management to review every charge and check for discrepancies. This doesn’t necessarily control all types of fraud, but it does allow much more oversight.

Conclusion

A business will always be exposed to some risk of fraud. Humans are prone to error and could be enticed to cheat their company out of money.

Every employee added to payroll is another liability to control for. That’s why TripLog offers an expense and mileage tracker app that saves you time, money, and protects your business from fraud.

Automated mileage tracking and reporting cuts out any inaccuracies and helps every business run more smoothly. Download the app today on iOS or Android to begin your journey toward more accurate expense tracking, or visit our pricing page to get started.

You can also schedule a complimentary live web demo to learn more. Thanks for reading!

The IRS Mileage Rate for 2021 – What to Expect

irs mileage rate 2021 triplog

A massive financial issue that companies, employees, rideshare drivers, contractors, entrepreneurs, and freelancers should be keeping an eye on, is the IRS mileage rate for 2021. While there is no published version of the said rate for 2021 yet (57.5 cents for 2020), the yearly mileage reimbursement rate comes in quite handy for organizations, as it helps them determine the best way to reimburse employees. 

Determining the mileage rate is also a great way for people to find out which mileage rate to add when filing taxes. For those who do not know, the mileage rate reimbursement rates were never supposed to be a company’s reimbursement rate by the IRS.

On the contrary, they came into existence to serve the role of a cap for organizations. Simply said, any money given to employees over this rate essentially becomes taxable income.

Related: Remote Work Expense Reimbursement Requirements Explained

For steering clear of this problem, employers can recompensate around the rate per mile. For example, the rate during 2019, used to be around 58 cents for every mile.

Therefore, sole proprietors would be wise to utilize the same rate whenever calculating the expenses of running small businesses, which may also include driving for a transportation company like Uber. 

Are you preparing for the 2021s reimbursement rate? If the answer is yes, consider keeping the following things in mind. 

The IRS Mileage Rate for 2021

In case you do not know about the IRS mileage deduction rate, familiarizing yourself could go a long way. There is a high possibility that you know it by another name. However, the rate will essentially be the biggest amount an organization can provide its workers per mile, without paying the reimbursement’s taxes.

Determining Mileage Rates – What are the Indicators

Several indicators can help determine the right mileage rates. Let us discuss some of the most common ones that companies resort to. 

Vehicle Maintenance and Costs

After the downsizing and bankruptcy of most rental car businesses, the prices for used vehicles reduced considerably. Also, it is worth keeping in mind that the rates of used automobiles do not impact mileage rates.

Related: Google Maps Mileage Tracking Explained

That said, with the low new vehicle inventory recently, the prices for used cars are slowly increasing. This shows that the rates of new automobiles will not face a massive impact.

According to some reputable valuations, the prices for new vehicles increased only by 2.5 percent during September 2020. After that, however, they remained mostly flat, which indicated supply-related challenges, among other issues. 

There is no denying that the automobile maintenance industry experienced a massive decline during the lockdown, it is slowly but surely bouncing back and may raise prices to ensure they catch back up to their growth targets. 

Insurance Rates

The seemingly everlasting increase of insurance rates is something that everyone knew would happen with the passage of time. However, things took an unexpected turn when those rates finally began to drop, for obvious reasons. 

The amount of people traveling reduced significantly. This meant that traffic would be lower, drivers would be less distracted, and there will be a smaller number of accidents. That said, the slight decrease in insurance rates will not play a massive role when deciding the mileage rate for 2021.

triplog irs mileage rate

It would be safe to say that oil experienced arguably the rockiest year compared to others. Sure, the news was not as widespread as other events, mainly because it got buried under other headlines.

Nevertheless, there were several contributors that led to this rocky season, and one of them was the pandemic. It impacted the economy globally, significantly decreasing business and personal mileage. 

However, problems were brewing long before the pandemic as OPEC+ AND Russia were in a long production standoff without any clear winner. According to speculations, the reason for this standoff was to capture market shares.

Related: 7 Ways Uber & DoorDash Drivers Can Save on Gas in 2022

However, it was likely from the perspective of supply and demand. There was a lot of oil, but the need was surprisingly low. What’s more, business mileage activity still remains lower than the pre-pandemic levels, as we head in the fourth quarter and the same foes for fuel demands.

Although the oil surplus and the pandemic were 2020s atypical assets, their impacts could carry onto 2021 and be massive determinants for the IRS mileage rates. There seems to be no end to the pandemic in the United States, or anywhere else for that matter.

In addition, several indicators suggest that business activity may not come back to where it was before the pandemic until summer 2021. Since industries like tourism and travel have a massive impact on fuel consumption, it may take some time to match the previous year’s oil surplus. 

Predicted IRS Mileage Rates for 2021

Although we are a few months away from the official announcement, everything that happened during this year points towards a decrease. However, there is nothing to indicate whether the decrease will be minimal or substantial so far. 

Getting Ready for the IRS Mileage Rate 2021 – What Can Your Company Do

Does your organization reimburse employees? If the answer is yes, reconsidering that approach may be a wise choice for the following reasons:

  • Maintenance and fuel costs are specific to areas. Therefore, reimbursing every employee at the same rates, or giving them similar lump sums would be wasteful and quite unfair
  • The correct cents per mile reimbursements could be lesser than the IRS’ mileage rate, and that is how it should be. Why? Because the mileage rate provided by IRS is mostly there as a guide. Therefore, if you reimburse above the rate and you will have to pay taxes for the reimbursements. It would be best if you considered a mileage rate beneficial for your company and is employees
  • Using the Internal Revenue Service mileage rate for reimbursements tends to result in high reimbursements for high mileage drivers and low reimbursements for low mileage drivers. Try searching for a fair option for each employee as it may also offer effective cost control. 
  • Among every vehicle program option, the FAVR (fixed and variable rate) reimbursement could be the perfect fit as it accounts for variable and fixed vehicle costs. 

The upcoming IRS mileage deduction rate for 2021 is arguably the most anticipated one due to the events that happened in 2020. Needless to say, organizations should prepare themselves to weather the storm, making sure they can operate without too much hassle.

Related: Fixed and Variable Rate (FAVR) Reimbursement Explained

To learn more about how company mileage tracking and mileage reimbursement can help save your business money, try out our mileage reimbursement calculator or schedule a complimentary live web demo today.

5 Great Tips to Help Property Management Firms Save Money and Time

property manager expenses

More organizations are realizing the need to automate as much of their operation as possible. Property management firms are no different, as employees are often required to drive from location to location for a variety of reasons.

Precise tracking each trip can become a challenge, whether the firm owns and operates a fleet of vehicles or allows staff to be reimbursed for using their own vehicles. While many property management firms can do very well and have robust balance sheets, improper mileage tracking can eat away at profits and turn healthy margins into unprofitable enterprises.

To help mitigate unnecessary costs and ensure all operational deductions are realized, here are 5 tips that property management firms can incorporate today to save their money and time.

Mileage Tracking Employees

With an effective company mileage tracker like TripLog, property management companies can track the mileage employees drive when going from property to property. Whether an inspector is assessing damage at a managed office location or maintenance staff is ensuring upkeep at a residence, keeping track of mileage for each employee is critically important.

Related: Why Small Businesses Should Track Their Mileage

Besides managing other income and expenses for the property, determining how employees spend their time behind the wheel helps property management companies better manage overall costs and employee time.

Mileage Tracking Trips

In addition to tracking employee activity, tracking individual trips with real-time fleet location tracking makes TripLog a valuable tool for any property management company.

Company administrators can determine and set criteria for groups of employees or individual staff. Approving certain types of trips for reimbursement and/or tax deductions will also help keep a lid on costs while maintaining IRS compliance.

managing property expenses save money

Collecting Reports

TripLog facilitates the collection and compilation of data from individual trips and employee activity by integrating it with existing business systems. This integration requires no additional processes or training.

TripLog’s Web API capability allows for seamless sharing of information with solutions such as Concur, QuickBooks Online, and Xero. This, in turn, saves additional time and money by removing manual collection or input of daily employee or fleet trip information.

In addition, TripLog allows for customized reports designed to help admins and executives review mileage expenses and make more informed operational decisions.

Approving Mileage Logs

With the powerful TripLog web dashboard, administrators can manage all employee and fleet mileage tracking and approvals from a central hub. The dashboard also allows for automatic approval of mileage logs based on company policies and other predetermined criteria.

Related: Fixed and Variable Rate (FAVR) Reimbursement Explained

Administrators can increase or decrease criteria as well as easily add or remove employees. Nothing gets paid or processed without executive or administration approval.

IRS Compliance

Property management firms must often manage multiple moving parts during the course of running their operation each day. TripLog allows them to streamline one of the more important aspects of their business: mileage reimbursement.

Staff can download the easy-to-use app today on iOS or Android and start tracking their mileage and related business expenses more accurately. Management can centrally manage their fleets and individual drivers with an easy-to-use dashboard that helps reduce cost and wasted time.

Businesses can also check out TripLog’s mileage reimbursement savings calculator or schedule a complimentary live web demo to learn more.

Case Study: Business Mileage Tracking in the UK

lorries need mileage tracking

Managing a vehicle fleet isn’t easy, from dealing with everyday problems to ensuring the logistical needs of the business are being met, especially in a period of growth. The company may not be able to run the fleet at its optimum level from a cost and tax perspective, and risks non-compliance by not keeping proper records or paying the right amount of tax.

Today, we’re going to look at a business mileage tracking case study in the UK. HMRC views mileage as a high-risk area and would evaluate how the company deals with business and personal mileage by reviewing its systems, processes, and controls.

The company would be expected to substantiate any mileage claimed. For example, date, where from, location, and why the travel was taken.

This is onerous and takes time from both an employee’s and employer’s point of view. A manual system is inaccurate, inefficient, and time-consuming for the company as a whole.

Mileage Tracking Case Study in the UK

Supermarket Ltd has a fleet of 500 lorries where mileage is paid by fuel cards. It has 500 company cars paid by fuel cards with different engine sizes and fuel (electric/petrol/diesel), and on average reimburses 500 employees for business mileage on a monthly basis, and relies on employees to mark personal travel, which many fail to do.

Related: Issues With Claiming Business Mileage in the UK

Currently, it doesn’t require employees to keep a log of business miles and reimburses employees who have personal cars through spreadsheets. It also has come to the finance department’s attention that personal car owners may have overclaimed when submitting expense claims.

It is also concerning when company car owners use their cars for personal use but don’t declare it, which may result in additional work as well as an increase in tax for the employee and employer. The company cannot cope with the volume of 1500 vehicles, especially with the monthly VAT submissions and dealing with different engine sizes and fuel types as the advisory fuel rates change monthly.

In addition, the P11d process is cumbersome and a lot of the time is trying to find out information on car value, engine size, etc. Furthermore, the company’s management team is seeing increased fines for speeding and accidents. The company has outlined these issues below. 

Current Problems 

1) HMRC requires substantiating every business mile, even those spent on fuel cards. They cannot automatically assume all miles are business-related. 

2) Manually claiming VAT on mileage based on advisory fuel rates with added complexity as VAT claims depend on engine size and type of fuel, as well as the month, where the advisory fuel rates on fuel may change.

There is also the risk of claiming VAT on private fuel and ending up with a scale charge. Employees send in fuel receipts, which means more paperwork.  

3) They run the risk of having the wrong mileage rate being used which will result in increased costs as employees may claim, for instance, 0.45p, when the correct rate should be 0.25p. If they pay more than the Approved Mileage Allowance Payment rate, then it becomes taxable on the P11d. 

4) Unable to determine private journeys, therefore increasing costs and risk of fuel benefit charges on the employee. Employees may be going on private trips on company’s time, which is a double whammy. 

5) Possible risk of fraud from those with personal vehicles by claiming for fictitious journeys or claiming additional miles. Rounding up trips seems common, and inadvertent claims for private trips like going from home to a contracted workplace or stopping en-route for private activities can also occur. 

6) No KPI data available, like cost per mile or analyzing data on route optimization.

7) Cannot monitor drivers behavior. 

8) Cannot track whereabouts of vehicles.

Related: How To Know if You Qualify for Mileage Claim in the UK

Company Decides to Install Business Mileage Tracking Device 

1) Mileage is captured automatically to and from, as well as the number of miles. Employees can add information and mark their private journeys as needed. It can also upload fuel receipts.

2) Company deducts personal mileage from the salary of the employee so there is no fuel benefit or VAT scale charge.

3) Facilitates VAT claims as the finance department can download a report with the VAT calculated on fuel base, amount of fuel used, engine size, and month.

4) Data, when available, can check for obvious errors and fraud. For instance, home to a place of work claims or private trips.

5) KPI data available to reduce costs. Able to monitor the length of journeys and miles, thereby reducing costs by advising the driver of the optimum routes to take in the future. Cost per mile analysis, including why the journey is taking longer or costing too much.

6) Track vehicles and help logistics, as well as reduce time for deliveries. Improved utilization of employee time. 

7) Analyze driver’s mileage consumption and encourage better driving to lower fuel costs.

8) Monitor driver’s behaviors, including speeding. Speeding can increase the likelihood of accidents and fines.

9) Lower fuel costs will result in reduced CO2 emissions.

10) VAT receipts are stored electronically rather than dealing with thousands of receipts.

Costs Saving For Mileage Tracking Expense

  • Lorry travels 100,000 miles per annum 
  • Company car 35,000 miles per annum 
  • Personal cars 20,000 miles per annum 
  • Lorries = 500 * 100,000 * 5% * £0.55 = £1,375,000 
  • Company Cars =500 * 35,000 * 5% * 0.15 = £131,250 
  • Personal Cars = 500 * 20,000 * 10% * 0.45 = £450,000 
  • Employee Fuel Benefit NI = 500 * £1000 = £500,000  

Reason for Cost Savings 

1) Better driving and optimal route maximization.

2) Personal travel detection and reimbursement.

3) Overclaim on mileage through rounding. 

4) Incorrect mileage rate.

5) Accurate data less likely for additional tax, e.g. VAT Fuel Scale Charge.

Other Costs

1) Employees fuel benefit charge.

2) HMRC fines of £3,000 for not keeping proper records and risk of a detailed audit, with penalties up to 30% for tax unpaid and deemed to be careless.

Time 

1) Checking and Approving Mileage Claims.  

2) Working out VAT element manually including checking VAT Receipts 3) Personal Travel Reimbursement 

4) P11d submissions including Fuel Benefit Charge 

5) Improved utilisation of company time (personal travel/idle time) 

Average 5 days a month for 1 Finance Staff: £200 * 5 = £1000 per month. Annual = £12,000 Average 2 day a month for Management: £500 per month Annual = £6,000  

Employees spending two days a month equivalent logging business mileage = £250 * 2 = £500  : Annual £6000 

Employee utilising company time for personal trips: 1 day a month = £250 * 1 = £250: Annual  = £3000 

Total Savings: £2,500,000 

Automated Mileage Tracking System 

A company mileage tracking solution system is essential for any business. The possible savings for a large company are significant and definitely cannot be ignored.

In the above case study, which is based on conservative estimates, the company could save a whopping £8.5m. Studies have shown that 47% of employees overclaim on business mileage, we have just taken a figure of 10%.

For lorries, we have only taken 5% in savings. They are unlikely to have any personal travel expenses, but the main savings will be through route optimizations, driving behavior changes, and proper employee utilizations.

For company cars, we have taken 5% savings as the likelihood of private travel, which is considered to be high. Again, route optimizations and driving behavior changes will be important factors in lowering costs. 

Main Benefits Summary

1) Innovative approach and reduced expense cycle. Mileage data can be integrated into the expense claim system and paid accordingly.

Personal mileage cost recovery can be integrated with payroll. Mileage can be automatically submitted to the accounts software by the press of a button. 

2) Save both employee and employer administrative time.

3) Lower fuel costs.

4) Reduction in fraud.

5) Recovery of personal mileage.

6) Data availability and analysis with KPIs.

7) Lower CO2 emissions.

8) Improved driver behavior and reduced risk of fines and accidents.

9) Accurate VAT returns and maximized claims.

10) HMRC compliant and less likely to result in extensive audits and penalties.

11) Tracking of vehicles to increase efficiency.

12) Reduced taxes; for instance, the VAT scale charge.

13) Better reporting; for instance, VAT on fuel on one singular report, rather than dealing with having to collate multiple spreadsheets. There are other useful reports for personal mileage recovery and for P11d filing.

14) Save paper/postage, as VAT receipts held electronically.

Conclusion

Mileage reimbursement coupled with an automatic mileage tracker app can be a powerful tool to save companies time and money. Try out our mileage reimbursement calculator to see how much you can save or visit our pricing page to learn more. You can also schedule a complimentary live web demo here.

TripLog for ADP Workforce Now

adp triplog mileage reimbursement

Effective automation with TripLog can cut down the costs that usually aren’t visible on a balance sheet, be it the time cost of manually logging and processing mileage logs or the costs of accounting for manual processes. With one-click submission and easy approval, TripLog and ADP Workforce Now make mileage reimbursement a breeze.

TripLog is a mileage tracking mobile app and cloud solution that ensures accuracy, automation, and transparency. With TripLog, small to mid-size companies, as well as larger enterprise organizations, can have a smart mileage solution at their fingertips.

Increase Employee Accountability

Employee accountability is just one reason why automating your mileage tracking is so important. Time saving is key.

Productive time shouldn’t be spent manually logging and processing mileage logs. It’s why making sure your team is utilizing automated tracking software that connects with your payroll system is an absolute necessity, as it can significantly cut down on mileage reimbursement costs.

Along with time savings, over and under reimbursements can cost businesses thousands by paying for over-reported mileage or having to reconcile paper logs at the end of any given pay period.

triplog with adp workforce gives insight

To provide a complete solution, TripLog integrates with payroll processing leaders such as ADP. ADP Workforce Now offers a complete human capital management (HCM) platform that benefits owners, employees, and HR pros for small to midsize companies.

Using an HR and payroll provider like ADP makes a lot of sense, and they offer solutions that fit a variety of different business sizes and types. TripLog’s integration with ADP Workforce Now helps make payroll much simpler by exporting automated mileage expense logs directly into ADP.

Just review mileage expenses, approve or edit them as necessary right in TripLog, and one button click later, ADP will have the data needed to run payroll. TripLog tracks each trip automatically and allows for easy expense capture and classification so you don’t have to waste time on manual mileage logs for reimbursement.

Connect TripLog to ADP Workforce Now Simply and Quickly

After subscribing to TripLog Mileage for ADP Workforce Now from the ADP Marketplace, ADP customers can easily access TripLog the solution right through their portal using a single sign-on (SSO) with their ADP login credentials). To make things simple, ADP customers can even start a free trial right from ADP Marketplace.

Alternatively, existing TripLog customers who also are implementing ADP Workforce Now can simply purchase the TripLog Connector data connector for ADP Workforce Now, which enables the integration’s secure data-sharing between the two solutions. To learn more about TripLog’s integrations with connector and integration with ADP Workforce Now by ADP, visit the ADP Page or visit the ADP Marketplace.

Company mileage tracking solutions like TripLog are powerful ways for businesses to save time and money. Use our mileage reimbursement calculator to see how much a company mileage reimbursement solution can help you save.

To learn more about TripLog’s mileage tracker app, visit our pricing page or schedule a complimentary live web demo today.

Amazon Flex Mileage Tracking | 5 Tips for Amazon Flex Drivers

tips to save amazon flex drivers money

Amazon has been a boon over the last several years, offering Amazon FBA (Fulfilment by Amazon) and Amazon Flex. Like many in the gig economy, Amazon Flex offers drivers the ability to become an Amazon delivery partner.

Drivers can set their own hours, picking up packages from an Amazon delivery station and delivering them to customers. Shifts are available in blocks of 3- and 6-hour increments.

Like any independent contractor, such as Uber or Lyft drivers, those working through Flex use their own vehicles. This requires the ability to properly track mileage for accurate accounting and tax purposes and a tool such as TripLog can save drivers thousands.

There are a number of benefits to using a mileage tracker app like TripLog, as Uber and Lyft drivers have already discovered. For information on mileage reimbursement, click here.

Amazon Flex Mileage Tracking Tip #1: Find the Mileage Tracking Method That’s Right for You

Amazon Flex drivers can choose from up to six different mileage tracking options when using TripLog.

Options include MagicTrip, which allows drivers to simply get into their vehicles and begin driving, as well as the new TripLog Drive, which increases tracking accuracy and reliability. Each of these options makes use of the vehicle’s existing Bluetooth capability.

Amazon Flex Mileage Tracking Tip #2: Use a Mileage Deduction Calculator To See How Much You Can Save

For drivers who want to know exactly how much they saved in taxes in a given month, week, or down to the individual trip, try our mileage deduction and reimbursement calculator. Taken directly from existing tax forms, Amazon flex drivers can now be ahead of the curve by knowing exactly how much in tax deductions they earn as they work their shifts.

tips-for-amazon-flex-drivers-to-save-money

Amazon Flex Mileage Tracking Tip #3: See Your Trips at a Glance With Daily Map View

TripLog’s Daily Map View feature is a great way for Amazon Flex drivers to see their driving routes for their entire day and review previous trips. This provides a big picture to drivers while not having to rely solely on text-based overviews.

Related: Google Maps Mileage Tracking Explained

Amazon Flex Mileage Tracking Tip #4: Daily Trip Journey – All of Your Trips in One Place

With Daily Trip Journey, Amazon Flex drivers don’t have to worry about looking at each individual trip one at a time.

Save valuable time by viewing all of your trips, each day, together. This feature also allows drivers to name and select those common locations with a touch of a button.

Amazon Flex Mileage Tracking Tip #5: OCR Receipt Scanning Makes Expense Tracking a Breeze

While mileage tracking is critically important, Amazon Flex drivers can also use TripLog to track their business expenses and income. By using the camera available on iOS and Android phones, drivers can easily take a snapshot of their receipts and categorize transactions so that they are ready for tax time.

With gig economy opportunities growing rapidly, Amazon Flex drivers are looking for tools to help manage and grow their businesses. Company mileage trackers like TripLog provide easy-to-use tools and apps that allow drivers to easily set and track their mileage, making it one less thing they have to worry about.

To get started with TripLog, download the app on iOS or Android. You can also schedule a complimentary live web demo, or visit our pricing page to learn more.