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Distribution companies across America face a common challenge: how to fairly reimburse their mobile workforce for vehicle expenses while controlling costs. As fuel prices fluctuate and vehicle costs vary dramatically by region, traditional car allowances and basic mileage reimbursement programs are failing to meet the needs of both employers and employees. The solution? Fixed and Variable Rate (FAVR) reimbursement programs – a sophisticated approach that's transforming how distributors approach vehicle reimbursement.
The distribution industry presents unique challenges when it comes to vehicle reimbursement. Your sales reps traverse vast territories, accumulate significant mileage and may operate across diverse geographic regions – each with its own cost structure.
Del Papa Distributing, a century-old Texas-based distributor serving 17 counties across the Gulf Coast, initially struggled with tax burdens and inconsistent reimbursements. Meanwhile, Hoffman Beverage wanted to save hours of time by switching to automatic mileage tracking.
[.quote-wrap][.quote-top][.quote-top]"One of the concerns that we really wanted to make sure we had right was that variable cost – what factors are going into that variable cost that are going to be reimbursed to our people every month,".[.author-attribute][.is-ljdelpapa][.is-ljdelpapa][.author-facts][.author-facts][.author-bold]LJ Del Papa, [.author-bold][.author-pos]Sales Manager for Del Papa Distributing[.author-pos][.author-attribute][.quote-bottom][.quote-bottom][.quote-wrap]
FAVR programs address complexity and accurately and fairly reimburses employees by recognizing that vehicle costs have both fixed (costs that don't change depending on how much you drive) and variable (costs that do change) components:
Fixed costs include:
Variable costs fluctuate with usage:
When Del Papa Distributing switched to a FAVR program with Everlance, they discovered benefits that went far beyond simple cost savings. Their employees, who previously received a flat car allowance, now enjoy reimbursements that accurately reflect their actual expenses. The finance team gained unprecedented visibility into vehicle costs, while HR reported improved employee satisfaction and retention.The results were striking:
Hoffman Beverage's implementation of a modern mileage reimbursement system addressed the complexity of managing vehicle costs across their diverse distribution territory. By transitioning to Everlance Business, they gained the ability to analyze costs by different revenue channels including convenience stores, bars and restaurants, and grocery stores. This detailed analysis enabled them to ensure their stipend structure was appropriate for each area they served.
The mileage reimbursement program proved particularly valuable for Hoffman's large-scale operations serving 2,500 customer locations. Through Everlance's data analytics, they achieved:
As CFO Archie Simmons noted, this systematic approach not only saved administrative time but also provided immediate access to real-time data, significantly increasing visibility into their existing routes and improving their entire reimbursement process.
When calculating your reimbursement rate, consider these critical factors:
Geographic Variables:
Business-Specific Factors:
Modern FAVR programs leverage technology for seamless implementation. The Everlance app automatically track trips simplifying the mileage tracking process.
[.quote-wrap][.quote-top][.quote-top]"It's like Tinder. You swipe left if it's a personal trip, you swipe right if it's a work-related trip. It can't really be much easier than that. Then all those work-related trips add up to the dollars you get reimbursed. The user-friendliness of the app is a huge win, not only just for me but for any of our employees to get on board with."[.author-attribute][.is-ljdelpapa][.is-ljdelpapa][.author-facts][.author-facts][.author-bold]LJ Del Papa, [.author-bold][.author-pos]Sales Consultant for Del Papa Distributing[.author-pos][.author-attribute][.quote-bottom][.quote-bottom][.quote-wrap]
As distributors continue to adapt to changing market conditions, the need for sophisticated reimbursement solutions grows. FAVR programs represent the future of vehicle reimbursement, offering the flexibility and accuracy needed in today's dynamic business environment.
The most forward-thinking distributors, like Del Papa and Hoffman Beverage, are already using FAVR programs to gain a competitive advantage. They're discovering that fair, accurate reimbursement leads to higher employee satisfaction, better retention rates and ultimately improved bottom-line results.
Ready to transform your vehicle reimbursement program? Consider how FAVR vehicle reimbursement can benefit your distribution company. Our team of experts will guide you through every step of the transition, ensuring a smooth implementation that delivers immediate results.
To learn more about how FAVR works, please check out our guide FAVR Reimbursements: Separating Fact from Fiction about Fixed and Variable Rate Allowances. Or answer a few quick questions about yourself, and we'll be in touch.
Damask is the Content Marketing Lead at Everlance, where she develops engaging content to showcase how Everlance's mileage tracking software help businesses and self-employed professionals track for taxes. She specializes in creating educational resources that demonstrate how users can maximize their savings on business expenses through mileage tracking.
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