Control Company Costs
The Wheels of Change are Spinning Fast: An SAP Concur Podcast Conversation on Optimizing Mileage Spend
Whether you’re clamoring to return to the office, contemplating a hybrid work model, or are staunchly opposed to ever setting foot in the office or going on a business trip again, workplace setup opinions are at an all-time high. And why not? According to SAP Concur customer data, mileage spend is consistently one of the top expense categories for all verticals. If you’re looking to give twenty-one hours back to each employee each year, dig into your mileage program and tune in to our podcast!
We asked Marchelle Klippenstein, Vice President of the Value Experience Group at the SAP Concur organization and Ken Robinson, Market Research Manager for Motus, to share their expert perspective on optimizing mileage programs post-pandemic.
Business is forever changed
As we emerge from our home offices, personal and professional mileage is increasing— but it’s different from pre-pandemic conditions. “We're all familiar with working from home and [a] decentralized approach to work, but the way that we do business has changed in a way that I don't think is ever going to revert back to the way that things were, say a little more than a year ago,” shares Robinson. While many offices are not completely shuttering their doors, teams have found new ways to collaborate and execute tasks remotely with increased levels of productivity and employee satisfaction.
We’re all a little different
All business travel is not equal, and neither should be a mileage program. “The IRS one-size-fits-all mileage standard is not the only option,” shares Robinson. “Strangely enough, inside of the IRS tax regulations there's information on what it takes to pay a tax-free mileage reimbursement and FAVR is outlined there as the method that's really optimal, even though a cents per mile approach could be applied and people can just log mileage.”
When trying to determine the right mileage program for your organization, here are some key things to re-consider:
- Gas prices by region
- Tax-free viability
- Vehicle allowance or stipend programs
- Accuracy of tracking and reporting
- Fleet, rental, or personal vehicles
Productivity vs. cost-savings: 21 hours per employee per year saved
A key cost-savings in fleet vehicle programs is a decreased fuel cost in comparison with fuel reimbursement of personal vehicle mileage programs. Now that fleet vehicles have been sitting idle, this cost offset is vastly different. Robinson shares, “The value [of an optimized mileage program]…particularly when you're talking about the documentation or substantiation requirements that are outlined in the IRS tax code…It's about twenty-one hours a year that are saved per employee.” Quick math will show you how much 21 hours per employee per year costs – if that’s not a compelling figure, peek at your top expense categories. We’re fairly certain that mileage will consistently hit your top ten areas of expense annually. If you could save both time and money for your organization by adjusting your mileage program, wouldn’t you?
New behavior, new expectations, new policies
Business travel is picking up speed, so now is the time to assess the need for change at your organization, modify your policies and then train everyone on what’s new. “Everybody's in this readdressed stage right now and I think mileage is just one piece of that that needs to be re-looked at, right?” asks Klippenstein. “It's new behavior. It's new expectations that the employees now have that the reimbursement factor is going to just always be there. I mean, overall, it's just policy reset or program design for specific outcome, specific budgetary control. Our customers are going to have to come back into that old. They can't just now expect that, okay, well, we're going to grant home office everything. It's going to change.”
Learn more about how to optimize mileage spend for your organization through the Concur FAVR by Motus partnership by contacting an account representative today!