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PLANNING SERVICES

Lease vs. Reimbursement


It's inevitable that when companies are trying to cut expenses, a comparison of company provided vehicles vs. a reimbursement plan will be reviewed. When a thorough analysis is done, most companies will either find that reimbursement is more expensive, or that too much of the burden is shifted to employees.


Some of the major reasons reimbursement may not work are:


  • Wrong Company Image may be Projected:  With driver reimbursement, whether a vehicle is appropriate to the type of image the company wants to project is determined and controlled by the employee.

  • Employee Vehicles Increase Liability Exposure:  If a vehicle is not provided by the company, then the company must be certain that the driver has sufficient insurance to protect it from liability, should there be an accident while a driver is on company time.

  • Elimination of Hiring Advantage:  Providing a company vehicle gives your company a competitive edge in hiring top caliber salespeople, technicians, and managers.

  • Employee Productivity Decreases:   A business that does not provide a company vehicle has little or no control over the condition of an employee's car. Poorly maintained vehicles experience more down time and repair expenses.

  • Costs are unfairly Shifted to Employees:  It is more expensive for employees to use personal vehicles for business than it is for a business to offer company vehicles. For instance, a company is able to acquire vehicles at wholesale, and qualify for fleet incentives that individuals are not eligible for.

AT A GLANCE

Disdvantages of Reimbursement:

  • Wrong Company Image
  • Company Liability
  • No Hiring Advantage
  • Productivity Decreases
  • Employee Costs