In most companies, employees submit reports of the miles driven for business purposes to the finance team. The finance team verifies the claims and approves the mileage reimbursements. While this sounds pretty straightforward, there are a lot of things that can go sideways.
When it comes to mileage reimbursement, a lot of companies focus solely on creating and enforcing stringent policies. It’s equally important to focus on the processes used to keep track of mileage expenses and reimbursements. Manual processes involving hand-written logs or spreadsheets are not only rife with errors and inefficient but an invitation for fraud. Using dedicated mileage reimbursement software can eliminate the confusion and chaos that comes with traditional systems.
Mileage reimbursement software helps business accurately keep track of the use of personal vehicles by employees for business purposes. It tracks the odometer readings and the distance covered, and calculates the exact amount to be reimbursed. Also, it connects with an expense management system to ensure that all mileage expenses are accounted for.
While every business is unique and has its own requirements and policies when it comes to mileage reimbursements, there are a few key functionalities all mileage reimbursement software should have.
The system should keep an accurate log of the trip and report the exact distance covered automatically. The ideal tool reduces the need for manual data entry. It should also support round trips and trips with multiple stops.
The system should accommodate your mileage expense policy and enforce it effectively. Whenever an expense that doesn’t comply with the guidelines is reported, the system should flag it immediately.
You should be able to set up different rates for different vehicles in addition to the standard rates from the IRS (58 cents a mile in 2019). Even though the excess amount becomes taxable, it makes sense to offer additional reimbursements in places where gas and travel expenses are high.
The very purpose of tracking mileage automatically is that data is available in real-time. It’s essential to have a mobile app which employees can use to track and submit mileage expenses when they are on the road.
A system that integrates with Google Maps API or other similar software can ensure that the distance reported is accurate. All you’d need to do is enter the departure point and the destination and the system calculates the exact distances between the two places.
Once reports are submitted and approved, the mileage expenses should be added to the expense management software and journal entries should be posted to the accounting software automatically. Having an integrated system of software applications eliminates data entry and manual errors.
It’s important to review mileage expenses once a while to improve your reimbursement process. Unchecked reimbursements can easily add up in a large workforce and can cause a dent on your budget. The system should give you key metrics and insights to cut back on unnecessary spending.
If you’re looking for a tool to manage your mileage claims, check out Kissflow Finance. You can set up and customize forms to automatically calculate the reimbursable amounts based on odometer readings.
After submitting the form, you can create your own workflow to make sure everyone who needs to sign off and approve the form gets to see it. Having an audit trail also helps with record keeping and tax-related activity. With Kissflow Finance, you can structure and streamline all your finance processes.