Use of personal vehicles for business purposes is a common practice in many organizations, even if they have a motor pool. However, organizations conducting “business as usual” may be unsuspectingly losing tens of thousands of dollars a year in personal vehicle use reimbursements. While it may seem easier to continue a well-established practice, organizations can virtually eliminate this unnecessary expense and improve vehicle utilization with an automated motor pool solution. Today's blog takes a look at how Scott County, MN took control of their personal vehicle usage costs and saved thousands of dollars and many hours of staff time.
Let's start by taking a look at some of the pitfalls of using personal vehicles for business purposes. When personal vehicles are being used for business, fleet managers are unable to assess what size fleet is realistically needed to carry out business, leading either to an inadequately-sized or bloated fleet. When an organization is funding unused motor pool vehicles while paying for personally-owned vehicle (POV) reimbursements, costs quickly spin out of control. However, most organizations never recognize how bad the waste is because oftentimes fleet departments manage “fleet expenses” and a different department manages travel expenses.
In addition, costs related to the use of POVs can be tricky to manage. Inflated expenses occur when employees overestimate their mileage instead of recording it precisely. Some staff members might even intentionally pad their mileage or make personal detours during business travel. Another expense related to personal vehicle usage is the cost to process mileage reimbursement requests. Many organizations process hundreds or thousands of requests. If each request takes less than 10 minutes from start to finish (data entry, accounting, check processing), the administrative costs rack up quickly. That's one more downside to the use of personal vehicles.
What can you do about it? Scott County, MN took control of these costs by using the FleetCommander system to automatically enforce their policy limiting personal vehicle use. Drivers must check online to see if a motor pool vehicle is available before using a personal vehicle for business purposes. Using a personal vehicle as a last resort has resulted in major savings. Streamlining the vehicle reservation process has added convenience for Scott County employees while reducing fleet staff labor. Reimbursement requests have decreased from 200-300 per year to less than 100.
Scott County Transit and Fleet Manager Troy Beam tells us: “The added convenience of online reservations and streamlined fleet management of the FleetCommander system has boosted morale here at Scott County. We saved $250K initially, and cut POV use by 65% since then.” Beam adds: “We could not be more pleased with the mileage reimbursement functionality of FleetCommander. We look forward to showing this to some of our other local government agencies so they can realize the benefits of the software. It will not only save us money in mileage reimbursements and staff time, but it will also help us understand the trips we are not able to accommodate with a motor vehicle, which will help us right size the fleet,” Beam says.