Gas Card vs. Mileage Reimbursement: How to Make the Right Choice?
Emily Maina
Last update on:
September 19, 2024 4:15 AM
Published on:
Every small business owner has tried to figure out the best way to handle employee travel expenses. Should you go with gas cards or mileage reimbursement? It's a tough decision, but don't worry, we've got you covered.
Managing employee travel expenses can be a headache. From tracking mileage to paying workers back for gas purchases, the process is often time-consuming and prone to errors. However, the reimbursement process can be a breeze if you make the right choices.
In this guide, we’ll explore gas card vs. mileage reimbursement, covering the pros and cons of each to help you make an informed decision. We will also examine how Timeero can play a pivotal role in streamlining your travel expense management processes.
Searching for a way to reduce your business travel costs?
Gas Cards vs. Mileage Reimbursement for Employee Travel Expenses
Let’s first get a better understanding of what it means to use a gas card and what mileage reimbursement entails. While some organizations have company vehicles that workers can use, others let employees use their personal cars for work-related activities. They then cover the business expenses these employees incur.
Companies that opt for gas cards give workers a prepaid card that can only be used to buy fuel. These cards frequently have limitations as to which gasoline stations they can be used at.
Employees who use their personal vehicles for business purposes are often paid back for the expenses they incur while on the road. This process is known as mileage reimbursement. It is important to note that California, Illinois, and Massachusetts, require mileage reimbursement.
Employers typically compensate workers using either a custom rate set by the company or the IRS standard mileage reimbursement rate. Some companies may prefer the FAVR (Fixed and Variable Rate) method that combines a fixed monthly payment with variable reimbursements based on actual mileage driven.
What Are the Pros and Cons of Each Method?
Offering a Gas Card
Benefits
It is more convenient for both workers and companies to use gas cards since they simplify the process of monitoring expenses. Employees don't need to pay for gasoline and then wait for reimbursement. Employers are also able to conveniently monitor fuel costs by using the transaction information.
Employers can establish spending limitations or restrict the kind of transactions that can be made using gas cards to control company costs.
Some gas cards come with additional benefits, such as rewards programs or discounts on fuel purchases, which might result in cost savings for both the company and workers.
Drawbacks
It is possible that employees might find their gas cards are only accepted at a select few gas stations or gasoline providers.
If the right controls are not in place, employees may use their gas cards for personal use, which could lead to increased costs for the business.
It is not possible for fuel cards to cover all of the costs that workers incur when they use their personal cars for work-related purposes. Some vehicle expenses that may not be covered include depreciation, maintenance, and repairs.
Mileage Reimbursement
Benefits
Employees are compensated for the exact distance traveled for business reasons which ensures accuracy and fairness in remuneration.
There is less administrative overhead required than with gas cards since employees just need to submit mileage logs or expense reports for reimbursement. If the business uses an app to track mileage for work, this gets much easier.
Employers and workers can benefit from mileage reimbursement savings since it is often tax deductible.
Drawbacks
If workers have to wait for extended periods of time to receive compensation, especially if they have substantial travel expenses, they may run into cash flow issues.
Employees may encounter fluctuations in gas prices between the time costs are incurred and the time they are repaid.
For a quick and easy way to calculate mileage reimbursement based on the IRS rate, try our free calculator.
Factors to Consider When Choosing Between Gas Card and Mileage Reimbursement
When deciding between a gas card and mileage reimbursement, several factors should be taken into account:
Cost Control
Gas cards allow employers to set spending limits to prevent overbilling. They can also restrict where team members can refuel.
Business owners can sign up for discounts at particular gas stations to further reduce expenses. Additionally, gas cards help companies better manage their budgets by enabling them to track gasoline expenses through transaction data.
On the other hand, mileage reimbursement gives workers the freedom to decide where to refuel and which routes to take. If not carefully tracked, this could result in increased costs. Using one of the best mileage tracking apps like Timeero allows you to monitor employee miles accurately.
To keep expenses under control, employers need to set clear reimbursement policies and rates. Check out this free mileage reimbursement policy template to help you get started. Make sure to mention in your policy that the employee driving from their home to their place of work does not count as reimbursable miles. We cover this in more detail in our commuting mileage reimbursement guide.
The Requirements of the Job
Think about how often your employees will need to use their own cars for business-related activities. If they travel for work regularly, a gas card would be a better option. Being able to consistently access pre-loaded fuel funds without having to pay for them out of pocket ensures that operations continue uninterrupted.
You can also consider the distances they travel for business use. For those whose work-related duties primarily involve short-distance travel, such as completing errands locally or attending quick meetings nearby, mileage reimbursement may provide more benefits. This compensation approach maximizes cost-effectiveness by taking into consideration the actual miles covered by the employee.
Administrative Efficiency
Another important consideration for employers when choosing a reimbursement method is administrative efficiency. Distributing cards to employees, monitoring transactions, and reconciling expenses are just a few of the administrative tasks associated with issuing gas cards.
In contrast, employers who opt for mileage reimbursement usually have less administrative burden. However, if employers use traditional mileage logs or spreadsheets, they will have to ensure accuracy.
Carefully reviewing any submitted expenses to avoid mistakes or fraud is exhausting and time-consuming. An automatic mileage tracker streamlines the process and reduces the time and effort needed for administrative work. With an app such as Timeero, all employees have to do is clock in, and the software records their miles as they drive.
Employee Preferences
Employers should consider their employees' preferences when deciding between mileage reimbursement and gas cards. Certain employees may find gas cards convenient, particularly if they travel for work regularly and would rather not pay for gas upfront with their own money.
Other workers may prefer mileage reimbursement because it is flexible. This option lets them select the gas stations and routes of their choice. Involve your employees in the decision-making process and consider their feedback.
How Can Timeero Help You Manage Travel Expenses Better?
Whether you choose to offer your employees a gas card or reimburse them directly for business mileage, Timeero is an innovative solution that can make your job easier. Let’s take a closer look at how some features of this software can be beneficial:
Track Mileage Automatically
Timeero’s mileage tracking feature is a true game-changer when it comes to managing travel expenses. It is especially helpful for businesses considering offering mileage reimbursement, as it offers a reliable method for determining what travel costs are reimbursable.
In addition to reducing the possibility of error and guaranteeing fair compensation for business travel, employees are no longer required to document their mileage using traditional techniques like manual logs or spreadsheets.
For companies that use gas cards for employees, employers can cross-check the gas consumed with the distance driven. This is because it provides a precise record of the distance the worker covers.
The GPS tracking feature even shows the exact places workers visit and the routes they follow to get there. Admins can view the whereabouts of their employees in real time on the Who’s Working dashboard for greater accountability.
You can view where each employee is when they are clocked in.
Accurate Mileage Calculations
Timeero goes beyond simple mileage tracking by offering precise mileage calculation capabilities. Companies that reimburse mileage greatly benefit from this feature, which reduces disputes over mileage expenses.
Timeero's mileage computations guarantee accuracy and transparency whether you're paying staff members using the IRS standard mileage rate or a custom rate specifically tailored to your company's requirements.
You can obtain the total amount owed without doing additional work by setting your desired cost per mile in your account settings. This automation reduces the possibility of calculation errors that could result in financial disparities while also saving employees a great deal of time.
You can customize mileage cost per mile on Timeero.
Segmented Tracking
Timeero's Segmented Tracking feature provides useful data regarding how employees spend their workdays. It includes information about the places visited, distances covered, and the duration of time spent at specific jobs or locations. In essence, the workday is divided into more detailed chunks that are easy to understand.
Segmented tracking on Timeero.
Because these reports are generated automatically, segmented tracking is a hassle-free tool for improving business efficiency. Just one clock-in is required at the beginning of the workday, and one clock-out is required at the end of it.
It simplifies travel expense management by offering insights into each trip and any stops made along the way. You can confirm that the employee is not asking for reimbursement for personal use of their car.
Account For Additional Expenses
When taking business trips, mobile employees may incur unforeseen expenses on the road besides gas. Companies that use traditional methods expect their workers to keep records of these costs and present them at the end of the trip, week, or month. If the records are inaccurate, this opens up the reimbursement process to a multitude of errors and potential disputes.
Timeero offers a solution for this. Because employees have the option to attach a note or a photo of receipts to their timesheet, they can ensure that all the specifics of their expenditures are properly recorded. An admin can examine the note that an employee adds to their timesheet and if it adds up, repay for consts incurred..
The app allows employees to add photos and notes.
Best Route Feature
The suggested route function in Timeero assists staff members in establishing the most economical and effective routes to their locations. It does this by comparing the actual route to the shortest one.
Businesses that provide gas cards will benefit from this feature because it encourages employees to follow routes that use the least amount of gasoline, resulting in lower total travel costs. Another advantage is that employees have shorter commutes, providing them more time to be productive during the workday.
Workers can follow the shortest routes.
Access to Customizable Reporting
Timeero makes certain you have all the relevant documentation in case there is ever a disagreement about mileage. Each employee's mileage throughout a shift is detailed in their timesheet. Reports on mileage tracking and other critical business data are also available to you.
Mileage reports on Timeero.
This is useful for determining tax deductions or for demonstrating your IRS compliance. You have access to all of this mileage monitoring information for four years, so you may use it whenever you want as a reference.
Integrations With Payroll Systems
Timeero eliminates manual data entry by providing seamless integrations with current accounting and payroll systems. For businesses that reimburse mileage, this feature lowers administrative costs and increases expense reporting accuracy.
By integrating Timeero with payroll software, businesses can easily reconcile expenses and guarantee regulatory compliance. It reduces potential errors and gives administrators more time to focus on strategic initiatives rather than tedious paperwork.
Available Timeero integrations.
Use Timeero To Easily Manage Travel Expenses
In the debate between gas cards vs. mileage reimbursement, there is no one-size-fits-all solution. Each option comes with its own set of advantages and drawbacks, and the right choice depends on your organization's specific needs.
However, by leveraging the features of Timeero, you can effectively manage employee travel expenses, whether you opt for gas cards or mileage reimbursement. This app takes the guesswork out of your reimbursement program, ensuring efficiency and employee satisfaction. Learn more about it from our detailed Timeero review.
We’ve covered how gas cards compare to reimbursing for mileage, but what if you’re considering car allowances or monthly stipends for your employees instead? Read our article on car allowance or mileage reimbursement for useful insights.
Mileage Reimbursement vs Gas Reimbursement: FAQs
How Do Gas Cards Compare to Mileage Reimbursement for Employee Travel Expenses?
Gas cards make managing expenses easier for companies by providing ease and control over spending. However, they might limit fuel purchases to particular stations, which would reduce flexibility for employees. On the other hand, mileage reimbursement provides flexibility but necessitates careful tracking because compensation is awarded according to the actual miles driven.
Emily Maina is a tech-savvy writer with a passion for creating content. With years of experience in the industry, she is well-versed in the latest trends and developments in the tech industry. When she’s not working, Emily enjoys exploring the great outdoors or watching her favorite shows.
.webp)
%202.svg)
