In 2022, adaptability and flexibility are the keys to a competitive and cost-effective vehicle reimbursement program or car allowance. The pandemic has left both challenges and opportunities in its wake. But that is not the only unique factor affecting business vehicle travel this year.
Why a 2022 car reimbursement checklist?
Every year brings new challenges to business vehicle reimbursements. But the year 2022 has brought a particularly unusual combination of factors for business owners and management to consider.
From aftershocks of the Covid-19 pandemic to massive inflation to high gas prices and the effects of war in Ukraine, employees who drive for work continue to face uncertainties around the costs of business travel. A strong vehicle reimbursement policy can do a lot to set valued employees at ease.
The mBurse 2022 Best Practices for Vehicle Reimbursements checklist contains 10 practical tips for ensuring that your company's policy will protect employees and enable the company to reach its goals – even in the midst of today's unique combination of challenges and uncertainties.
Post-pandemic vehicle reimbursement challenges
First and foremost, as U.S. business travel adapts in the wake of two years of disruptions from Covid-19, significant effects continue to play out. While in 2020 and 2021 major challenges centered on travel restrictions and a reduction in face-to-face meetings, today's challenges center more on the longer-term economic effects.
Supply-chain disruptions, particularly in the area of semiconductors and other vehicle parts, have sent vehicle prices skyrocketing. The inability of supply to keep up with demand has contributed greatly to inflation, especially with an increased amount of cash injected into the economy via pandemic-related stimulus and relief programs.
With your employees facing much higher costs to purchase, maintain, and repair their vehicles, there is no question that they will be looking to the company to provide a robust and fair reimbursement or car allowance.
Other vehicle cost factors for 2022 reimbursement
Lately, the number one issue on drivers' minds has been the historically high gas prices. While prices were already rising due to a number of factors at work in 2021, Russia's invasion of Ukraine has sent prices even higher. While gas may not form the largest portion of reimbursable vehicle costs (that distinction goes to depreciation), it is the cost people experience most frequently.
Added to this reimbursable cost is an array of other inflationary costs that everyone is experiencing and that will likely continue to intensify as the war continues and as supply chains continue to adapt to last year's disruptions – the costs of food, of airfare, of hotels, of anything that must be shipped (i.e. almost everything we buy!).
March of 2022 saw the highest year-to-year increase in inflation in 40 years at 8.5% overall compared to March of 2021. Used car prices are up 35.3%, airfare costs are up 23.6%, and hotel costs are up 25.1% compared to one year ago.
In this inflationary economy with continued war-related uncertainty hanging over workers, it is important to choose the most adaptable, flexible, and cost-effective policy that also fully reimburses every employee's vehicle costs. That sounds like a tall order, but by employing best practices it is very possible to achieve these goals and retain valuable employees long-term.
How to download the car reimbursement checklist
Select the image below to download our best practices checklist and get started with a review of your company's policies.