There are three options for reimbursement programs:
1. Fixed rate only
This option is administered as a flat monthly payment, but it’s considered disincentive for sales professionals with larger territories; typically, it’s used by small businesses because of the ease of implementation.
2. Variable rate only
This option is administered as a cents-per-km rate – also known as “driving for dollars”; it should be used for occasional business use, e.g. a senior executive that doesn’t use vehicle for business use daily, but is driving to a conference.
3. Fixed & variable rates combined
This option is the most accurate, fair, and considered to be the “best market practice.” It is based on reimbursing for fixed costs of securing the vehicle, including plates and insurance (monthly fixed rate) and the variable operating costs of driving it (gasoline, a portion of maintenance, oil, tires, repairs, etc.).
CPSA MEMBERS ONLY: For more details and data concerning vehicle costs and reimbursement programs, consult the Canadian Professional Sales Association’s 2011 Guide to Vehicle Costs & Policies, which includes average reimbursement rates based on type of vehicle and kilometres driven.
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