Car Allowance - What does it mean
Every company in this world is here to make profit. There are two ways achieve this. First one is to maximize the sales and thus increasing the revenue and hence the profits. The other way around is to minimize the costs involved in the core process of the company. Sales maximization may take lots of time depending upon the type of the company and the market saturation levels. However cost minimization can be achieved by employing a few simple steps. Let us understand this by an example
Transportation costs are one of the major costs for the service industry. Here the employees are often involved in large number of travels throughout the day and most of them use their personal cars for the purpose. While this saves the companies the investment on fixed assets like vehicles, the companies do have to reimburse the employees for the money they have used during their visits.
This method is very tedious both for the company and the employees and is often inaccurate. Sometimes companies tend to overcompensate the employees while other time they under compensate the employees. This often creates a cash management issue for the companies.
However one of the ways the companies can avoid all this mess is by using vehicle reimbursement services. These programs calculates a fair reimbursement rate for each individual driver taking into account all the geographic cost variances, territory conditions and the actual number of business miles driven.
Such programs have a two way effect. On one hand it ensures that every employee gets his due Car Allowance and while on the other guarantees that the costs incurred by the company are minimum.
