Managing a company vehicle fleet requires more than tracking mileage and fuel spend. Employers also need clear policies for personal use, driver safety, maintenance, MVR monitoring, fuel card controls, and compliance. This guide explains the core areas of fleet management and when it may make sense to transition some drivers from company vehicles to mileage reimbursement, car allowance, or FAVR.
What is fleet management?
Fleet management refers to the processes and systems used to oversee company-owned vehicles. This includes everything from purchasing and maintaining company vehicles to tracking mileage and fuel consumption.
Optimizing operations and reducing fleet management costs requires a set of clear policies. Compliance is often the most difficult aspect of managing company vehicles. Challenges can include personal vehicle use, unnecessary fuel purchases, and employee-involved accidents. To ensure compliance, policies must be clear and enforced.
What is a fleet vehicle?
A fleet vehicle is any vehicle owned or leased by a business for commercial use. This can include cars, trucks, vans, and specialized vehicles. These vehicles bring a set of risks that the company must manage properly. Fleet use of a vehicle has particular tax implications that differ from personal use.
When Should a Company Use Fleet Vehicles vs. Reimbursement?
A company-owned fleet can make sense when the business needs control over vehicle type, branding, equipment, safety standards, or availability. Fleet vehicles are also useful when employees need specialized vehicles or when the company wants tighter control over maintenance and usage.
However, a fleet may become expensive when employees drive different amounts, use vehicles for personal trips, or operate in regions with different fuel, insurance, and maintenance costs. In those cases, mileage reimbursement, a car allowance, or FAVR may provide a more flexible and cost-controlled alternative.
Fleet use of a vehicle vs. personal use
Some organizations rely on employees who carry out their jobs using personal vehicles. These personal vehicles do not meet the fleet definition and should be managed differently. Organizations that use employee-owned vehicles should pay mileage reimbursement, a car allowance, or a FAVR reimbursement to drivers to offset expenses.
Work fleet vehicle use refers to business use of a vehicle owned or leased by the company. The organization must pay for vehicle maintenance and travel costs, such as gas, tolls, and parking fees. Often, fuel costs are covered by a company credit card or reimbursement.
Managing Company Fleet Vehicles
Fleet car costs
Corporate fleet vehicles cost more than the purchase price. Owning vehicles comes with costs like depreciation, insurance, maintenance, repairs, and more. Many of these costs are tax-deductible as long as management follows IRS-compliant procedures.
Corporate vehicle costs can balloon if employees abuse the company car perk, drive recklessly, or use company fuel for personal trips. Driver oversight is a key area for reducing costs and keeping the company fleet program sustainable.
Car fleet management policies
To properly manage fleet costs, an organization should have a set of enforceable policies that cover the following:
- Mileage approval
- Safe driving
- Fuel card use
- Personal use
Company fleet mileage tracking
Calculating mileage is a critical aspect of corporate fleet management. Accurate mileage tracking helps businesses monitor vehicle usage, optimize routes, and reduce fuel costs. Recording business mileage also proves the business use of the fleet vehicle for tax deduction purposes.
Mileage tracking is especially important when employees use company vehicles for both business and personal trips. Without accurate records, it becomes harder to separate business use from personal use, enforce vehicle policies, calculate taxable personal use, and identify unnecessary mileage.
IRS mileage log rules for corporate fleets
An IRS-compliant mileage report should be timely and record trip information necessary to demonstrate business use. This information should include:
- The date and business purpose of the trip
- Departing location and destination
- Number of miles driven
While many businesses have relied on spreadsheets in the past, it has become more common to use a mileage-tracking app. The process of manually entering trip info can be laborious. Using Google Maps or MapQuest to determine mileage is also time-consuming. Automating the process removes a tedious task from employees.
What is the best mileage app for fleet use?
Using the best mileage tracker app can streamline this process by providing real-time data and insights. A well-designed mobile app adds convenience for drivers and facilitates route optimization. A good mileage app is also necessary to distinguish between business and personal use of the vehicle.
The qualities of the best mileage apps include
- Easy-to-use, intuitive interface
- Accurate GPS routing
- Hands-free automatic mileage tracking
- Battery-saving features
- Easy editing of trip information
- Excellent customer support
Mobile workforce management software
The best mileage apps come as part of a suite of mobile workforce management software. This software includes an administrative dashboard that streamlines the approval process and provides oversight of drivers. A well-designed dashboard will help managers oversee fleet use efficiently. Helpful tools include reports that provide productivity insights and data for driver coaching.
Gas cards for corporate fleet cars
Gas cards are a helpful tool for managing fuel expenses. They allow businesses to control fuel purchases, track spending, and simplify accounting. Giving employees a credit card for gas is simpler than reimbursing them for receipts. But fuel cards are also prone to misuse.
Ways to manage fleet card overuse
By setting boundaries for gas card use, you can control fuel costs. The key is to have a clear set of policies and enforce them. Here are some helpful practices to follow when managing a corporate fuel card:
- Set weekly or monthly fuel limits by role, route, or expected mileage.
- Restrict fuel purchases by day, time, merchant category, or vehicle.
- Require receipts or transaction matching for exceptions.
- Review fuel purchases against mileage records.
- Define how personal fuel use will be handled, including payroll deductions or repayment where legally permitted.
- Apply policy violations consistently.
Fleet compliance
One of the most challenging aspects of corporate fleet management is fleet compliance. Fleet compliance includes policies that enhance driver safety, prevent accidents, and promote safe driving. Strong policies and accountability procedures are necessary to ensure compliance.
MVRs and fleet vehicle accidents
One of the most important tools is the MVR report. Using MVR monitoring is a crucial way to prevent accidents and reduce liability in the event of one.
What is an MVR?
An MVR (Motor Vehicle Record) report is a document that provides information about a driver's history. An MVR report will list any violations or accidents. Many businesses understand that reviewing an MVR report can help ensure they are hiring safe drivers. But maintaining a responsible fleet also requires regular MVR checks.
Regularly reviewing MVR reports can help reduce risks and enhance safety. Conducting regular checks of each employee's driving history can also provide legal protection.
Negligent entrustment of a fleet vehicle
Responsible fleet oversight means ensuring that all drivers operate vehicles safely. If an employee causes an accident, liability can go beyond the insurance claim. The victims may try to prove that the employer has committed negligent entrustment.
What is negligent entrustment? A negligent entrustment claim may arise when a plaintiff argues that an employer allowed an unsafe or unqualified driver to operate a company vehicle. Regular MVR checks, documented driver reviews, and clear safety policies can help employers identify risk before an accident occurs.
Maintaining an employee with a spotty driving record may indicate negligence. This is why regular MVR checks are so important.
MVR monitoring and best practices
A motor vehicle record report provides a window into driving habits. Responsible fleet managers create systems for regular reviews of driving records and act when a violation appears.
These reviews should occur at least annually. A safer option is to purchase MVR monitoring services. This helps the organization react quickly when an employee gets a ticket or causes a non-work-related accident.
Driver safety and company vehicles
Another key practice to increase fleet compliance: Create a Driver Safety program with interventions for drivers whose records indicate risk. These interventions could include driver education, driver training, and even termination. Any organization with company vehicles must have a driver safety program. Prioritizing driver safety is a proactive way to prevent accidents.
Best practices for fleet management
- Regular Maintenance: Schedule routine maintenance for all company vehicles to prevent breakdowns and extend their lifespan.
- Driver Training: Provide training for drivers on safe driving practices and efficient fuel usage.
- Utilize Technology: Implement fleet management software to track mileage, fuel consumption, and vehicle performance.
- Personal Use Policy: Create clear rules about personal use of the vehicle. Charge employees for any personal use.
Fleet management cost savings
Following the four best practices listed above will generate savings from the high expense of operating a fleet. But there are other ways to reduce the costs of managing a corporate fleet.
- Rules for Gas Pumping: Limit fill-ups to certain days of the week or a certain number of gallons. Require permission to get more gas.
- Invest in MVR Monitoring: Continuous monitoring of MVRs can save money in the long run by encouraging safe driving.
- Adopt Telematics: Alternatively, investing in telematics that report driver behavior can encourage safe driving. Insurance companies use it.
- Right-size the Fleet: Evaluate the efficiency of the fleet and consolidate vehicles where possible. Switch some employees to personal vehicles.
Transitioning from a company fleet to mileage reimbursement
As vehicle expenses rise, some organizations may decide to transition away from part or all of their fleet. This can be challenging because employees love driving a company car. A company car is a great perk and a way to attract great workers.
But the expenses associated with company vehicles may require a shift to a more sustainable program. Alternatives include a car allowance, mileage reimbursement, or FAVR vehicle program. To learn how to select the best alternative and transition smoothly, read our guide.
Not sure whether a company fleet is still the right fit? mBurse can help you evaluate fleet costs, mileage patterns, driver risk, and reimbursement alternatives so you can decide whether to keep company vehicles, transition some drivers to reimbursement, or build a more cost-effective vehicle program.
FAQs About Fleet Management and Mileage Tracking
What is fleet management?
Fleet management is the process of overseeing company vehicles, drivers, costs, maintenance, safety, compliance, and usage. It helps businesses control vehicle expenses, reduce risk, and keep drivers accountable.
Why is mileage tracking important for fleet vehicles?
Mileage tracking helps companies separate business use from personal use, monitor vehicle activity, control fuel costs, support tax records, and enforce company vehicle policies.
How do fuel cards help with fleet management?
Fuel cards help businesses track fuel purchases by driver, vehicle, location, amount, and purchase time. They can also help identify unusual spending, reduce misuse, and simplify fuel expense reporting.
What is an MVR report?
An MVR, or motor vehicle record, shows a driver’s license status, violations, accidents, suspensions, and other driving history. Regular MVR reviews can help employers identify risky drivers and reduce safety exposure.
When should a company consider reimbursement instead of fleet vehicles?
A company should consider mileage reimbursement, a car allowance, or FAVR when maintaining company vehicles becomes too expensive or when employees drive different amounts. Reimbursement can offer more flexibility and may be more cost-effective for some drivers.
