According to figures released today, the businesses in Ireland are missing an opportunity to manage costs by paying its employees travel reimbursement when they use their own vehicles for work.
The practice of paying employees an agreed amount of money for travel undertaken in their own vehicles has become a standard in many areas of Irish business.
The rates are dependent on the type of vehicle being used, with government guidelines advising up to 59 cents is paid for each kilometre travelled in an employees own vehicle. Analysis conducted by Enterprise Rent-A-Car now shows that many organisations could be loosing thousands of Euros by paying these rates for round trips of 117 kilometres or more.
The graph above compares the cost of paying travel reimbursement and the basic cost of renting a vehicle plus petrol. Once the round trip reaches the 68 kilometre mark, paying travel reimbursement can become increasingly expensive compared to rental.
For example, an employer who allows an employee to use his or her own car (1,501+ cc) to travel between Dublin and Athlone twice a month will spend over €2,000 per year more than if they rented a vehicle for the trip. When looked at over an entire workforce, these costs can create a very real hole in any organisation’s finances.
George O’Connor, general manager at Enterprise Rent-A-Car in Ireland, comments: “There’s a clear cost imperative here for business. The practice of paying travel reimbursement could see many employers spending more money than they need to at a time when cost control and management is high on their agenda.
“But there’s more than simply economics at play here. Employee owned cars are almost always older and less well maintained than a rental car, and so there can be serious safety and efficiency questions to answer. Ensuring your drivers’ own vehicles are in good condition and have the relevant insurance for business use can be a time consuming and complicated task. Add that extra administration burden onto expensive travel reimbursement payments, and the overall picture is one of inefficiency.
“The solution is a potential culture change in the way transport is managed. By more careful transport planning, making more use of alternative modes of transport and ensuring employees take the most efficient options, organisations could save thousands of Euros per year.”