B2B Payments

Why Fleet Spend For A Mobile Workforce Is Rarely A Clear Picture

Fleet cards can be a beneficial alternative to manual expense reimbursements, especially when it comes to companies whose fleet drivers are only ever using company vehicles for work. But there are industries, like pharmaceuticals and consumer goods, in which fleet drivers use a company car for both personal and private use.

It’s this latter situation, says Donna Koppensteiner, senior vice president of Business Development and Marketing at fleet management firm Runzheimer, in which fleet cards fall short.

In a recent chat with PYMNTS, Koppensteiner offered up a scenario: say a professional fills up a gas tank twice a week with a company card, costing her employer $50 every time. Part of that gas is used on company time, and part is used while the employee is off the clock — yet the entire cost of the fuel lands on the company’s shoulders.

“The ability to really understand what someone’s personal versus business mileages are becomes a point of critical understanding,” she said, adding that drivers typically say 90 percent of their use of a company vehicle is for business purposes, while the remaining 10 percent is for personal use.

“What we’ve found is that … 25 to 30 percent is for personal use,” the executive stated, adding that fuel cards are often based on that 90-10 assumption. “For businesses, it’s really hard to get a clear, accurate count on what that division is.”

The traditional way of addressing this expense management issue is to manually track driver behavior, have the fleet driver pay for fuel and then have the company reimburse them for any mileage logged while on company time.

“Individuals are supposed to keep a mileage log for business use,” Koppensteiner explained. “It’s generally a laborious process.”

Fleet drivers have to track destinations, number of miles driven, times, dates and the business purpose of trips, meaning a highly manual process for drivers and a similarly manual, tedious process for fleet managers that then have to sift through the information to calculate how much an employee should be reimbursed.

“This is also a labor-intensive routine,” the executive said. “You have to do it in a very manual manner, and then you complicate that by sending in paper mileage logs to an administrator or a corporate office, and they have to perform some type of audit.”

Runzheimer recently launched its Equo Fuel solution, a mobile tool that enables companies to automatically capture data to differentiate between when professionals are driving on company time or not. The tool uses local fuel prices, fleet MPG data and other sets of information to then calculate driver reimbursement rates.

The challenge of understanding how much fuel is used for personal versus business use can apply to “basically any organization that has a mobile workforce,” said Koppensteiner. “It’s a significant population, and it’s white collar as well as blue collar.” Such a common point of friction for corporate fleets has driven FinTech’s focus on the industry, whether companies develop mobile-connected fleet cards with spend analytics capabilities or establish an automated way to differentiate between business and personal use of a company vehicle.

There’s more progress to be made, however, Koppensteiner said. Today, Runzheimer is rolling out mobile solutions, but a focus on interconnected vehicles is likely to shift how the fleet and expense management sector addresses some of the biggest points of friction in this space.

“From a future perspective,” the executive said, “the trend revolves around the connected car and the technology that will ultimately reside in the vehicle. The ability to pull that information and data to appropriately continue to reimburse people and be able to understand the cost associated with business is driving a lot of the applications we are developing now. More mobile apps will likely be moved into the vehicle in the next several years.”

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