Managing a corporate vehicle fleet effectively is crucial for businesses that rely on vehicles for their operations. This guide will provide insights into fleet management, mileage tracking, and the importance of gas cards and MVR reports.
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 use of vehicles, unnecessary fuel purchases, and employee-involved accidents. To ensure compliance, policies must be clear and enforced.
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.
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 in a different way. Organizations that use employee-owned vehicles should pay a mileage reimbursement, car allowance, or 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 the maintenance of the vehicles as well as travel costs like gas, tolls, and parking fees. Often fuel costs are covered by a company credit card or reimbursement.
Corporate fleet vehicles cost more than the price of purchase. Owning vehicles comes with costs like depreciation, insurance, maintenance and 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 perk of a company car, drive recklessly, or use fuel for personal trips. Driver oversight is a key area for reducing costs and keeping the company fleet program sustainable.
To properly manage fleet costs, an organization should have a set of enforceable policies that cover the following:
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.
An IRS-compliant mileage report should be timely and record trip information necessary to demonstrate business use. This information should include:
While many businesses have relied on spreadsheets in the past, it has become more standard 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.
Utilizing the best mileage tracker app can streamline this process, 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 for distinguishing between business use and personal use of the vehicle.
The qualities of the best mileage apps include
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.
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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 receipts for purchases. But fuel cards are also prone to misuse.
By placing boundaries around the use of a gas card, 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:
One of the most challenging aspects of corporate fleet management is fleet compliance. Fleet compliance includes policies that increase driver safety, prevent accidents, and encourage productive driving. Strong policies and accountability procedures are necessary to ensure compliance.
One of the most important tools is the MVR report. Utilizing MVR monitoring is a crucial way to prevent accidents and reduce liability in the event of an accident.
An MVR report (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 requires regular MVR checks as well.
Regularly reviewing MVR reports can help reduce risks and enhance safety. Performing regular checks of each employee's driving history can provide legal protections as well.
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 lawsuit occurs when a plaintiff tries to prove that the employer knowingly entrusted the vehicle to a risky driver. Maintaining an employee with a spotty driving record can point toward negligence. This is why regular MVR checks are so important.
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.
Another key practice to increase fleet compliance: Create a Driver Safety program with a set of 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.
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.
With vehicle expenses skyrocketing, some organizations may decide to transition away from some or all their fleet. This can be a challenge because employees love getting to drive 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 more about how to select the best alternative and transition well, read our guide.