5 Common Pitfalls in Electric Vehicle Reimbursement; and How to Avoid Them

As businesses transition towards more sustainable practices, managing the reimbursement of electric vehicle (EV) drivers has become a critical operational task. However, traditional approaches to reimbursement, which may have worked for petrol and diesel cars, often fall short when applied to electric vehicles. Without a thoughtful strategy, businesses can end up undercompensating drivers, causing frustration and even legal compliance risks.

In this blog, we’ll explore five common pitfalls businesses face when reimbursing EV drivers and how Paua Reimburse offers a comprehensive solution to avoid these issues.

1. Undercompensating Drivers for Public Charging Costs

One of the most common issues businesses encounter is undercompensating drivers who rely on public charging networks. Public EV chargers—especially fast and rapid chargers—can be significantly more expensive than home charging. Yet, many businesses reimburse at a flat rate, such as the government’s Advisory Electricity Rate (AER), which doesn’t differentiate between the cheaper cost of home charging and the higher cost of public charging.

How to Avoid This:

To ensure fair reimbursement, businesses should implement a system that tracks where the vehicle is charged and compensates accordingly. Paua Reimburse allows for location-based reimbursement, ensuring that drivers using more expensive public chargers are fairly compensated for their costs, while employees who primarily charge at home aren’t overpaid.

2. Relying on Unreliable Home Charging Data

When reimbursing employees for charging their EVs at home, many businesses rely solely on the data provided by home chargers. However, home charging data can often be inaccurate or incomplete, leading to incorrect reimbursements. Common issues include:

• Multiple EVs at home: Employees with more than one EV may charge personal vehicles alongside their business EV, making it difficult to differentiate between the two.
• Shared chargers: Some drivers use peer-to-peer or shared charging systems, which allows others to visit and charger their car, and can lead to double counting or inaccurate data.
• Data errors or connectivity issues: Home chargers may not always provide consistent, reliable data due to technical problems, leading to discrepancies in reported energy usage.

How to Avoid This:

Paua Reimburse eliminates the risk of unreliable data by gathering comprehensive mileage information for drivers. By using a single platform to track and validate all mileage, businesses can ensure accuracy and avoid overcompensating or undercompensating drivers based on incomplete or erroneous data.

3. Ignoring Fluctuating Energy Tariffs

Electricity prices fluctuate depending on factors such as time of day, energy supplier, and even regional differences. Many EV drivers use time-of-use tariffs, where they pay less for charging at off-peak times, while others may be on higher renewable energy plans. Flat-rate reimbursement methods, such as the AER, do not take these variables into account, which means businesses risk underpaying drivers who have higher energy costs or overpaying those who take advantage of cheaper, off-peak rates.

How to Avoid This:

With Paua Reimburse, businesses set the policy for home charge tariffs so it is clear for all. This ensures employees are compensated fairly for the actual cost of their electricity based on the company policy, whether charging at home, or in public. Paua Reimburse captures tariff information during onboarding keeping clarity centre of mind for the drivers.

4. Overcompensating for Home Charging

While undercompensation is a key concern, the opposite can also occur. When businesses rely on generic data or flat-rate calculations, they may end up overcompensating drivers, particularly those who charge their vehicles at home using inexpensive off-peak tariffs. Over time, this can significantly inflate business costs.

Additionally, home charging sessions that involve charging multiple vehicles (such as a family car) or charging through sharing chargers with other drivers can also lead to overpayments if there’s no system in place to validate the energy used specifically for business purposes.

How to Avoid This:

Paua Reimburse helps businesses avoid overcompensation by tracking mileage, where charging takes place and validating the miles driver for business purposes. By distinguishing between personal and business miles, and by considering the driver’s specific tariff, Paua Reimburse ensures that employees are fairly reimbursed without inflating costs.

5. Difficulty in Differentiating Business and Personal Miles

EV drivers may use their vehicles for both business and personal purposes, making it tricky to differentiate between the two for reimbursement. Without a reliable way to track business miles versus personal miles, businesses risk either overpaying or underpaying employees.

This is particularly problematic for drivers who charge both at home and on public networks, where the line between personal and business charging costs can blur.

How to Avoid This:

Paua Reimburse offers a solution by tracking mileage and utilising data that captures business-specific mileage to allocate them to charging sessions. This ensures that only the energy used for business purposes is reimbursed, preventing overpayment and ensuring compliance with company policies and tax regulations.

The Comprehensive Solution: Paua Reimburse

Traditional reimbursement methods are often ill-suited to the complexities of electric vehicle charging. From public charging costs to fluctuating tariffs and unreliable home charger data, businesses face numerous challenges when reimbursing EV drivers fairly. Paua Reimburse offers a comprehensive, HMRC-compliant solution that addresses these issues head-on, ensuring accuracy, fairness, and transparency in every reimbursement.

Key Benefits of Paua Reimburse:

• Accurate, real-time data on public charging.
• Fair compensation for both public and home charging, accounting for differing costs.
• Reimbursement based on energy tariffs, location, and business miles.
• Clear differentiation between business and personal charging events.
• HMRC compliance for peace of mind.

By adopting Paua Reimburse, businesses can avoid common pitfalls in EV reimbursement and create a more efficient, cost-effective, and fair system for their employees.

Ready to improve your EV fleet reimbursement process? Contact Paua today to learn more about how Paua Reimburse can help your business.

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