Educational Sales Company Reduces Mileage
Reports by 39% with mLog

THE CLIENT

An educational sales company was fielding 35 drivers. Each driver was reimbursed for vehicle expenses using a company-calculated mileage rate that was lower than the IRS standard business mileage rate.

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The Problem

After paying the IRS mileage rate for several years, company leadership decided to develop their own more modest mileage rate. This decision was based on an attempt to the control costs of their high-mileage travelers. After a couple of years of this company-calculated mileage rate, costs did decrease, but not significantly. Upon further review, leadership concluded that self-reporting of business mileage was limiting any reduction in costs.

The company also had concerns about employees that resided in employee-friendly states with expense indemnification codes, specifically California, Illinois, and Massachusetts. In these states, the labor codes required employers to be able to demonstrate that their reimbursement rate fully covered each employee’s costs or be exposed to civil suits.

The Goals

  • Develop an optimized reimbursement rate that complied with labor codes
  • Adopt a mileage capture model that did not rely on self-reporting
  • Ensure long-term cost controls for business vehicle reimbursements

Solutions

The company implemented a FAVR program to ensure they had a defensible reimbursement policy with a standardized methodology to ensure accuracy. The fixed and variable rate reimbursement model (FAVR) provides a transparent rate to employees that adjusts as costs increase or decrease over time, preventing both cost overruns and labor code violations.

The team also adopted the mLog mileage app to capture business mileage without self-reporting. This real-time mileage tracking tool eliminated after-the-fact estimates of mileage as well as padding of reported mileage. Privacy concerns were addressed by mLog’s features that prevent employers from knowing employees’ real-time locations and that only report business mileage, not personal trips.

The Numbers

mLog provided accountability and longterm cost control

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5.1%
Overall Cost Reduction
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$9,500
Annual Savings
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-39%
Reported Mileage

Results

The program overall was cost neutral, generating some savings. The company gained peace of mind that their policy was structured well and that employees received a fair and accurate reimbursement that helped control reimbursement costs.

The company also reduced the overall mileage by 39%, which resulted in a 5.1% cost reduction (after subtracting mBurse fees). Since some employees lived in higher-cost areas, the transition only generated $9.5K of annual savings. But the company improved its policy and automated mileage capture, making the employees accountable for business mileage.

With long-term cost controls in place, the new program was sustainable while providing defensible reimbursements to employees in states with strict labor laws.

Key Takeaway

Self-reported mileage, whether on a company spreadsheet or in an expensing system, will generally result in over-reporting of mileage. A mileage reimbursement rate allows employees to increase their pay simply by driving or reporting high mileage amounts, whether or not they are actually contributing greater output. An accurate mileage tracking app like mLog is the best way to eliminate this problem.