If your company requires you to travel in the course of business, it should cover expenses associated with that travel. Some firms offer employees the option of taking a company car on business trips or using their own vehicle and receiving a cash allowance for travel expenses. If you're offered this choice, you'll want to explore the advantages and drawbacks of both options.
Company Car - Advantages
If you choose to take a company car when traveling for business, you don't need to worry about putting wear and tear on your own vehicle. In many cases, the company provides you with a vehicle in good condition that you can use to attend client meetings, visit other locations and run general business-related errands. In some cases, the company may even allow you access to the car for mild personal use, depending on the agreement.
Company Car - Disadvantages
One disadvantage of taking the company car is that you'll need to pay for gas, oil changes and other basic maintenance out of your own pocket and seek reimbursement later. It can take an entire pay period or longer to receive your money. Also, if you're involved in an accident while using the car or receive a number of tickets, this places a financial burden on your company and could result in the loss of your job.
Cash Allowance - Advantages
With the cash allowance option, the company provides a stipend each week or month based on estimated mileage to cover the cost of using your own car in the course of business. One advantage of this arrangement is you don't need to worry about the responsibility of driving the company's vehicle. You also don't need to file expense reports and collect receipts for travel reimbursement. In many cases, the cash allowance counts as an added benefit on top of your salary.
Cash Allowance - Disadvantages
One potential disadvantage of the cash allowance is that it may not cover all your travel expenses. You may feel pressure to control costs and modify your travel plans to stay under budget. Another drawback when using your own car is that you subject it to excess wear and tear. Since you use the car more than you would for personal reasons, your mileage rises significantly each year. You may need to modify your auto insurance policy to account for the additional use. Also, it can prove challenging to keep track of all the costs involved when using your own vehicle for business purposes.
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