Business Use Percentage
A business use percentage (BUP) is the portion of a driver’s total mileage that is assumed to be business mileage. It is a key input for calculating fixed reimbursement rates using vehicle profiles. On FAVR programs, the business use percentage cannot be higher than 75%
Fixed reimbursement rates are based on the flat monthly costs (depreciation, insurance, taxes etc.) associated with owning a standardized vehicle profile. To calculate a driver’s fixed reimbursement, the total amount of these costs is multiplied by the driver’s assigned BUP. That way, the driver’s fixed reimbursement reflects the portion of their fixed costs that is attributable to business use.
Typically, companies use a single BUP assumption for all of their drivers. Higher BUPs lead to higher fixed reimbursements.