Profiles In Travel Management: Xerox Takes Expenses Paperless
Xerox Takes Expenses Paperless
Company: Xerox Corp.
Headquarters: Stamford, Conn.
2002 U.S. booked air volume: $23 million
Helen Kuhn, Xerox manager of customer service and satisfaction, is saving her company an estimated $5 million annually by taking an approach that Xerox is famous for—streamlining paper-based processes—and applying it to her own discipline, expense reporting.
In 2001, Kuhn designed the auto equity program, which electronically calculates mileage and reimbursements for drivers who use their personal vehicles for business travel. Two years after Kuhn worked with IBM to incorporate the module into the E-Pay System—Xerox's customized version of IBM's Expense Reporting Solutions—an estimated 7,000 Xerox employees, who consistently drive more than 500 miles per month, are using the program. Kuhn's efforts in the auto equity program have saved Xerox 15 percent to 20 percent when compared with prior practices.
When calculating the per-mile reimbursement rate for drivers, most companies use what is known as the IRS safe harbor rate, which this year is 36 cents per mile. "If you just look at what it costs you to operate your vehicle, the variable rate is less than 15 cents per mile and that's at current gas prices," Kuhn said. "Then if you look at what the IRS says is reasonable, which is currently 36 cents, the difference is wear and tear on your vehicle. If you're just driving casual mileage, there's no way you're going to incur that kind of expense."
That 36 cents per mile is the standard amount that U.S. taxpayers can deduct for vehicle expenses on their taxes, and commonly is the amount companies will reimburse drivers per mile. However, depending on many variables, including regional gas prices, insurance rates and car types, the actual rate of reimbursement can vary. By leveraging information through Runzheimer International, Kuhn has ingrained into the auto equity program the ability to calculate the actual costs employees incur when using their personal vehicles.
"We have 86 different cost areas or different cities in the United States and Puerto Rico where we have the majority of our drivers. We look at those 86 cities and what the fixed cost is for the driver in those locations," Kuhn said. "What is the cost of insurance, for example? The cost of insurance in Nashville is pretty reasonable, but when you get out to San Francisco or Los Angeles, the cost is exorbitant. So you want to make sure you're reimbursing the driver based upon the cost in their geography." Since the IRS rate is uniform across the nation and these varying details across regions and car types are not taken into account, Xerox has been able to shave off about five cents of the per-mile reimbursement rate, which has fostered tremendous savings. As the conditions that affect the rate of mileage reimbursement constantly are fluctuating, Kuhn must reflect these changes in the expense reporting module.
"We look at gas prices every month and we update the system on a quarterly basis," Kuhn said. "If something goes way out of line in a month, we will update the system. On an annual basis, we look at the number of miles that drivers put in their expense reports and make sure we've got them in the right mileage band. In our system, we have seven different mileage bands."
To streamline the expense reporting process, Kuhn made the auto equity program one component of her company's T&E expense reporting module, making the auto equity program just one more value that travelers fill in on their expense reports. "Instead of just having T&E expenses, we have auto equity and our company car program as part of the same system," Kuhn said. "If employees are using their personal vehicles, chances are they have other expenses as well, including hotels, meals, tolls or parking. They can process them all on the same expense report." Typically, Kuhn said, business travelers who use their own cars file their miles on a monthly basis along with their expense reports. The miles then are approved and automatically transferred to payroll, where a reimbursement is finalized.
The system has yielded a satisfied end-user. Kuhn performs an annual Web-based survey on employee satisfaction of support systems. Last year, auto equity received a rate of 89 percent satisfaction among users, the highest rate of satisfaction for all components of the E-Pay System.