During times of fast growth at a company, it’s essential to have the right systems in place to ensure that scaling happens without a hitch.
Take the example of a pharmaceutical company that’s experiencing a rapid approval of its drug. With all of the new business, that company suddenly needs a greatly increased number of traveling salespeople on their team. Since new employees will be required to drive for work, it raises the question of how they can best track their business mileage in a simple and effective way that doesn’t slow down company growth.
To meet these needs, a robust vehicle reimbursement program (VRP) is an important tool to successfully scale that pharmaceutical company’s sales team. And, with the rapid growth and increasing number of salespeople traveling for work, it’s also key for this VRP solution to be easy to implement, effective, and accurate. Additionally, to allow tax-free reimbursement on using cars for business use, it’s also critical that the VRP is compliant with IRS regulations for mileage reimbursements through a Fixed and Variable Rate (FAVR) program.
Cardata is a comprehensive and feature-packed solution — a specialized VRP outsourcing company with customizable offerings to help growing teams as they rapidly expand their driver count. Easy-to-use and with robust functionality, Cardata helps teams ensure compliant reporting, accurate mileage tracking, and a simple reimbursement process, all while removing the strain of administrating a program in-house.
Why a compliant VRP is essential
A compliant VRP ensures that mileage is properly tracked according to the IRS guidelines on tax-free vehicle allowances. This is one of the requirements from the IRS for business mileage reimbursements to be tax free.
A compliant VRP has significant financial benefits — a tax-free VRP can save up to 30% on total vehicle reimbursement, compared to taxable car allowances. Besides ensuring tax-free benefits for your sales team, there are potential consequences of not having a compliant VRP, including the possibility of assessments by the IRS of vehicle allowances as taxable income or payroll tax.
Why outsource your VRP to Cardata?
By outsourcing your VRP to a specialized company like Cardata, you can help make sure that your VRP is streamlined and effective for your business, saving time and hassle by freeing your team up from managing it internally. Cardata works directly with enterprises to create customized VRPs that not only meet the specific needs of your business, but also that properly align with IRS guidelines and reduce compliance burden, as noted above.
Cardata offers best-in-class mileage tracking that’s easy to use, automatic, and GPS-powered — making it an easy tool for your team to use for business travel. Apart from mileage tracking, Cardata also offers integrated expense management. This allow for reimbursements to be easily reviewed, approved, and paid out on time through Cardata Cloud — Cardata’s vehicle reimbursement hub that’s specifically designed to make VRP administration simple and straightforward.
Cardata Cloud also stores business records that are easily accessible. Having access to clear and automatic reporting can help your team more easily take a high-level look at your VRP, including things like driver logistics and expenses, which can present the opportunity to potentially spot areas for optimization and improvement.
During periods of high growth at a company, having effective systems in place can make all the difference — enabling teams to focus on the work at hand, rather than clunky processes and administrative details. With an outsourced VRP, companies have access to a centralized place where information on employee business travel and reporting is always at-hand, reducing the burden of managing your program internally. By partnering with Cardata, a specialized company with extensive industry knowledge and resources, companies are able to more easily scale sales programs and operations.
Can employees use personal cars in a VRP?
Instead of relying on a fleet of company-purchased vehicles, many businesses allow sales team members to use their personal cars for work under the VRP — something that can present a significant advantage. Allowing personal car use can provide a more flexible and attractive reimbursement program for salespeople, which can in turn help maintain employee motivation and satisfaction. Employees are able to drive the car that they choose and that fits their lifestyle, giving them more freedom and control.
On the business side, permitting personal cars could present a significant financial upside, since it can eliminate the need to purchase and maintain a fleet of vehicles for business use. Apart from the purchasing the cars themselves, a fleet of company cars comes with plenty of ongoing costs, including repairs, fuel, depreciation, insurance, and more.
Instead of using a fleet of company cars, consider switching to a fixed and variable rate (FAVR) reimbursement program. Essentially, this is when employees use their personal cars for business purposes and are reimbursed for business mileage. A FAVR reimbursement program also allows for better scalability, since it’s simpler to add employee drivers with personal cars, rather than go through the process of purchasing new company-owned vehicles for new employees or having unused cars in the fleet.
An outsourced VRP allows scalability and operational focus
Let’s look again to the example of the pharmaceutical company needing to quickly scale their operations and logistics. If that company was to outsource its VRP to Cardata, employees would be better able to focus their attention and energy where it matters most — on the rapidly-growing company and business-focused operations. Cardata would support this by handling the driving logistics, so employees wouldn’t need to worry about managing and administrating a VRP, and all of the work entailed to ensure accuracy and compliance.
An in-house VRP is a significant amount of administrative work, requiring company time and attention to both make sure that the program is being run efficiently, and that the reporting is per IRS guidelines. For that pharma company, a custom partnership with Cardata would help them seamlessly and smoothly expand their sales team as the business grows, saving significant time and resources. Leveraging an industry-expert with robust software can create a strategic advantage, freeing up time and energy to concentrate on core business to move the company forward.
Through Cardata Mobile — Cardata’s simple-to-use mobile app — employees are able to accurately and automatically track mileage in a matter of clicks. This offers a significant time-savings and also reduces the margin for error, compared to the painstaking and dated process of manually calculating mileage, keeping boxes of receipts, and spending time maintaining records of business travel.
This substantial reduction in administrative work is also a significant perk for employees. An outsourced VRP supports company scalability through time and resource saving, allowing teams to focus on the important work needed to support company expansion.
In conclusion: Your VRP matters for scalability
For a rapidly-growing pharma company — and for other companies with similar growth challenges — finding an effective and scalable way of tracking, organizing, and reimbursing business mileage is crucial.
Using a specialized VRP like Cardata can offer a multitude of benefits, including strong advantages when it comes to scalability. An outsourced VRP allows for traveling employees, HR departments, and leadership teams to focus more on the work at hand, by reducing the administrative and time-consuming burden of running a program in-house. Importantly, a specialized VRP also ensures that tracked business mileage is IRS-compliant, allowing for tax benefits.
If you’re looking to implement an efficient and customizable VRP, consider Cardata — already trusted by teams from Viemed, Crayola, TaylorMade, Arrow, Medtronic, and more. A strong partner in supporting company growth, let Cardata manage the time-consuming logistics of a vehicle reimbursement program, helping your employees to better focus on the work that’s most essential.
Ready to learn more about Cardata’s custom-built enterprise solutions and how they could benefit your business? Book a hands-on demo today to find out.
Disclaimer: nothing contained in this blog post is legal or accounting advice. Consult your lawyer or accountant and do not rely on the information contained herein for any business or personal financial or legal decision making. While we strive to be as reliable as possible, we are neither lawyers nor accountants. For several citations of IRS publications, on which we base our blog content ideas, please always consult this article: https://www.cardata.co/blog/irs-rules-for-mileage-reimbursements. For Cardata’s terms of service, go here: https://www.cardata.co/terms.