Variable reimbursements are one of the two main components of FAVR reimbursements. Variable reimbursements are determined by multiplying a per mile variable rate by the number of business miles driven by an employee each month. Variable rates are calculated using vehicle profiles and are designed to cover the per mile costs of operating a vehicle. This includes things like fuel and maintenance.
FAVR programs take into account both variable expenses, and fixed monthly expenses like depreciation and insurance. Because FAVR reimbursements include both a fixed component and a per mile rate, they tend to model costs more accurately than alternatives like a flat allowance or a CPM program.
Variable rates are based on expense data collected by FAVR providers like Cardata. They are affected by a variety of factors, including a driver’s assigned vehicle profile – especially it’s gas mileage – and the cost of fuel in the driver’s location.
Curious to learn more about how variable reimbursements and how they could impact your business? Find out more about how variable expenses work in a FAVR program, and learn more about FAVR rules (as of 2019). Consider speaking with a Cardata expert to find out more about how variable reimbursements work and can impact your business.