The pitfalls of manual mileage tracking

Managing business mileage is an important part of expense management for companies with staff travelling for business meetings or events. 
 
However, many companies still rely on manual tracking of mileage, and this presents several challenges. These range from employees accidently overestimating miles travelled to issues with tax compliance. Whether you're dealing with HMRC in the UK or the IRS in the United States, the consequences of inaccuracies and inconsistencies in recorded mileage can be far-reaching.  

Let's delve into the key challenges associated with manual mileage tracking and explore why it's high time for businesses to consider more efficient alternatives. 

For a quick overview on the challenges associated with manual mileage tracking, download this infographic. 

1. Excessive mileage claim  

One of the primary issues with manual mileage tracking is the potential for inaccuracies and inconsistencies in recorded mileage. Human error, forgetfulness, and varying interpretations of trip distances can all contribute to discrepancies.  

These inaccuracies can have severe consequences, especially when it comes to tax compliance with government agencies such as HMRC and the IRS. A YouGov survey uncovered that 56% of company car drivers are unaware of HMRC rules on reclaiming business mileage, highlighting the need for a more foolproof system. 

2. Applying correct rates 

People who manually monitor mileage might end up approximating distances instead of precisely documenting them. This inclination can result in overestimating the actual distance covered, leading to inflated reimbursement claims.  

The lack of awareness about company mileage policies can exacerbate the issue, causing excessive claims that may not adhere to organizational guidelines. It is crucial for companies to have accurate claims from employees to ensure correct reimbursement or charging back based on the appropriate HMRC or IRS mileage rates to avoid financial discrepancies. 

3. VAT recovery 

Proper documentation is crucial for VAT recovery, and manual tracking often falls short in this regard. Invoices, receipts, and a comprehensive mileage log are essential components of accurate documentation. Missing or incomplete records can pose difficulties in reclaiming VAT, potentially resulting in unnecessary overspending. 

4. Potential fraud 

A concerning aspect of manual mileage tracking is the potential for employees to deliberately falsify records.  

Some may claim personal trips as work-related, fabricate meetings or client visits, or even exaggerate the frequency of work-related activities to inflate mileage claims. According to a study by Soldo Credit Card, one in five employees falsifies expenses, underscoring the need for a more transparent and reliable tracking system. 

5. Slow reimbursement 

Manually recording mileage involves employees dedicating time to documenting details such as start and end odometer readings, as well as the purpose of each trip.  

This time-consuming process can lead to delays in submitting claims, potentially resulting in financial losses for employees. In fact, manual tracking can cost drivers a full 40-hour workweek of time every year, emphasizing the need for a more streamlined and efficient solution. 

Time for technology

In conclusion, while manual mileage tracking may have been the norm in the past, its inherent challenges make it an outdated and risky practice. With advancements in technology, businesses now have access to automated solutions (such as Zetadocs Expenses) that not only eliminate the pitfalls associated with manual tracking but also ensure accuracy, compliance, and time efficiency. It's time for organizations to embrace modern mileage tracking solutions to navigate the complex landscape of tax compliance successfully. 

To find out more, visit our “managing business mileage” page to discover how Zetadocs Expenses helps you manage fuel payments and business mileage (HRMC or IRS) for your company vehicles and employees’ private cars, ensuring tax compliance and full recovery of VAT on fuel.