In today’s competitive corporate world, businesses are looking into ways of retaining their staff. The use of incentives such as all-expense-paid trips, providing company cars, and entertainment allowances are becoming common. Of these, the provision of vehicles to the employees is increasingly becoming popular.
The fact is people have to travel to and from work and thus they will have to factor in transportation costs and modes as part of their work efficiency. Those going by public means have to adhere to set routes and timing; thus, they do not enjoy the freedoms and luxuries those with private cars do.
In an effort to level the playing field, companies are investing in transportation for their workforce as a measure to enjoy they are happy working for them therein increasing their productivity. Most of the new vehicles are sold to the corporate sectors where they are used as company vehicles.
Over the years, the provision of cars to employees has no direct cash benefit though it does increase personal mobility for the workers making it easy for them to move around and arrive to work on time. It, therefore, can be said to offer serious value to a company’s workforce.
Nevertheless, giving a company car to an employee may not always be a good thing. The cost of purchasing the car, the insurance with Miami insurance brokers, the taxes the staff face for using the car and just some of the drawbacks of providing them with personal vehicles. To help paint a better picture of things, here is a rundown of the top gains and challenges of investing in cars for your employees.
- Providing Specialized Transport
For companies whose business involves a lot of transportation of goods and equipment, the workers will need specialty cars such as vans, trucks, and delivery vehicles. It’s important for businesses to consider the traveling logistics of their employees and provide the necessary transport options. The type cars to get will depend on the specificity of the type of transportation challenges; the more specific, the stronger the case of availing these vehicles.
- Manage Your Corporate Image
For some corporate players, their employees are a significant part of the company brand, and thus they should be treated in accordance with such stature. Moreover, the provision of vehicles also plays a role in build the right brand perception.
The employees may drive different cars. A worker who arrives at the company grounds in an old and rundown machine dent the company’s image. Rolling in in a modern car, better yet something in the luxury range of things may raise eyebrows putting the company’s spending ethics in the spotlight. However, giving the employees corporate vehicles ensure that everyone is driving a car that’s within the acceptable stature for the company.
- Corporate Branding
In as much as employees will love working for you and willing to boost the company’s image through branding campaigns, they will not want to add the corporate logo to their vehicles. Therefore, providing company vehicles to them is a sure way of showcasing the business brand on the company fleet.
- Full Control & Oversight
Availing company vehicles allows you to choose not only the make, model and year of car but also control the insurance and upkeep costs of the fleet. You can agree to or remove safety and luxury features, install telematics (tracking systems), and where the vehicles can go for fueling and servicing. Such measures are not that easy to implement; your workers may not accept the installing of devices in their cars that let you see their location at all times.
- Increased Risk And Liability
Every vehicle on the road faces a significant risk of damage due to accidents. Not every driver on the roads is a competent one. With the company fleet, the business is liable for all accidents and since most crashes and road accidents occur at night or the weekends, the business shoulders the risk during the non-business hours.
- Large Upfront Capital
Acquiring a fleet of vehicles for the employees requires significant capital, and this can be a huge expense for small businesses and one that presents logistical challenges. Will the business struggle to fund its inventory or vehicles! Vehicle leasing is a suitable alternative to buying, but even then, the overall costs are still a substantial expense.
- Employees Don’t Get To Choose The Car
While the company and its staff all benefit in one way or another from providing vehicles to the employees, there is a drawback to the employees as there is to business. For some workers, they may need a car with safety features for the children, and some require need features to aid their physical limitations such as being handicapped or having medical conditions. Such staff members will often be exempted from user personal cars or have to settle for a vehicle that does not meet their needs adequately.
- Accurately Personal Use Report
Since the vehicles are given to the employees for work and personal use, the workers can use them outside of work during non-business hours or days. Such usage may have some limitations especially regarding the use of the cars for personal vs. business reasons, and this comes with a risk of increasing costs and audit challenges.
Moreover, you are expected to report the personal use of company vehicles to the IRS, and inaccurate can result in hefty penalties. The same applies to issue of back taxes due to improper audits. Also, your business stands to make losses due to personal use chargebacks if you do not have robust processes in place that monitor and ensure accuracy in charging the workers for the costs of unauthorized personal use of company cars.
Weighing Your Options
From the above information, it is evident that availing cars for your employees has its advantages and also presents certain drawbacks worth careful consideration. However, if you are keen on having more control over the type of vehicles your company expects its employees to drive to and from work, then the more the reason to consider providing the cars.
However, mitigating the risk associated with getting the fleet of vehicles is possible through having a program in place where employees desiring to own a personal vehicle can acquire it through the company. Also, reimbursement for private cars may also be an option worth considering.
Irrespective of the option you settle for, you will maximize the benefits of availing cars to your staff and also minimize the downsides by promoting driving safety.