Danielle Lackey, General Counsel at Motus, used the example of mileage reimbursement to highlight the importance of data in informing next-gen business intelligence and in ensuring employees are fairly and accurately reimbursed.
“I’ll be talking about the growing mobile workforce and how CFOs can use data and technology to tackle new business pressures,” stated Lackey at the outset of her thought leadership presentation at the 2017 Chief Financial Officer Leadership Forum held on May 9 in Los Angeles. “We’ll be looking at technology that CFOs can use that provides data analytics to inform business decisions in real time and how this intersects with the growing mobile workforce.”
Lackey asked, “What does mileage reimbursement have to do with these broader themes? First, it’s a big number. In sales and service, the top three line items are salaries, travel, and mileage. Adding technology to this part of your business results in hard cost savings, typically around 20%. It also ensures state and legal compliance. More importantly, using technology in that space is a robust way to gather next-generation business intelligence within your mobile workforce,” she said.
“In sales and service, the top three line items are salaries, travel, and mileage. Adding technology to this part of your business results in hard cost savings, typically around 20%.”
“We all know our workforce is becoming increasingly mobile. It’s estimated that by 2020, 72% of the US workforce will be mobile. Thanks to technology, productivity isn’t being sacrificed by this change,” she noted.
“There are two types of mobile workers—flyers and drivers. Flyers’ expenses are itinerary-driven. Drivers use their vehicles to service or sell to your customers, and their expenses are route-driven. Ten to 15 years ago, most companies used internal processes for their flyers for expense management, and now over 90% use third-party solutions like Concur.”
Lackey continued, “Drivers are an interesting opportunity, because there’s nowhere else in your business that you reimburse for a top-three line item that’s employee-reported, non-receipted, and not validated or verified. ChromeRiver estimates that travel fraud accounts for $2.8 billion annually, and over-reported business mileage is about 30% of that,” she said.
“Drivers are an interesting opportunity, because there’s nowhere else in your business that you’re paying out on a top-three line item that’s self-reported, non-receipted, and not validated or verified. ChromeRiver estimates that travel fraud accounts for $2.8 billion annually.”
“When looking at business mileage, it’s important to know whether this is being paid as reimbursement or compensation. “Without technology to calculate individual mileage rates, a flat approach is usually used across the employee base—using either a cents-per-mile or flat car allowance model. Without the data to know whether these options are accurate, it’s possible that you’re under-reimbursing, which exposes you to legal risk. If you’re over-reimbursing, you might have tax exposure. The flat car allowance is considered by the IRS to be compensation and is therefore taxable for you and the employee,” Lacked stated.
“A flat approach is, by definition, inaccurate,” she said. Every cost that goes into operating a vehicle—fuel, insurance, etc.—varies across the country. There’s one IRS-recommended reimbursement methodology that uses fixed costs based on where the driver lives and variable costs based on how many miles are driven. Lackey recommended using this method.
“My point in discussing all this is that data is king,” said Lackey.
“Mileage reimbursement isn’t mandated by the FLSA (Fair Labor Standards Act), but under-reimbursement can still result in FLSA violations. There have been a number of cases alleging labor-code violations, so it’s important to have the data to help you defend against these cases,” she noted.
Companies need to create a data ecosystem that establishes and informs company policy, deploys solutions for capturing driver mileage, and calculates individual drivers’ reimbursement rates based on where they drive and how much they drive, said Lackey. Personal devices can be used to auto-capture data.
“Mileage reimbursement sits within this broader, mobile-workforce-management ecosystem. There’s a great advantage to having a solution that easily integrates with other business-critical technologies you’re already using. You also have data you can use for next-gen business intelligence and have the agility to look at the outputs from an ecosystem perspective.”
“Mileage reimbursement sits within this broader, mobile-workforce-management ecosystem. There’s a great advantage to having a solution that easily integrates with other business-critical technologies you’re already using.”
ABOUT DANIELLE LACKEY:
As General Counsel, Danielle is responsible for all Motus legal affairs and works with strategic business units to drive initiatives that bolster IRS and legal compliance for Motus clients. Prior to joining Motus, Danielle co-founded and served as CEO of Cadence Counsel, a company that helps law firms and companies thrive in an environment where work, as we know it, is rapidly changing. Before founding Cadence Counsel, Danielle practiced as a litigator at Latham & Watkins, representing major corporations and senior executives in complex civil and criminal matters. She earned her J.D. with Distinction from Stanford Law School and is a graduate of Brown University (Phi Beta Kappa, Magna Cum Laude).