The Power of Cost Center Reporting in Vehicle Reimbursement

Matt SchweinertVehicle Reimbursement

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Employee travel and vehicle reimbursement represent a significant expenditure for companies with employees on the road, often ranking as the second largest expense. That said, managing this area can introduce uncertainties in cashflows and expense control. To address this challenge and enhance financial stability, a recommended approach for companies of all sizes is implementing a Fixed and Variable Rate (FAVR) vehicle reimbursement program. Utilizing a FAVR program, organizations can establish a framework that promotes consistency and predictability in cash outflows, surpassing the effectiveness of alternative vehicle reimbursement programs.

What is a FAVR reimbursement program?

A Fixed and Variable Rate (FAVR) vehicle reimbursement program is regarded as one of the most cost-center-friendly programs available today. For several decades now, organizations of all scales and across various sectors have been leveraging FAVR programs as a means of their vehicle reimbursement program. Best of all, a FAVR program, which is an IRS-approved non-taxable reimbursement, provides the driver with an accurate reimbursement that represents the actual cost incurred while maintaining consistent company cashflows. 

How FAVR supports a cost-center-orientated corporation? 

It is common for companies that operate across diverse industries to structure the organization into cost centers. This approach enables a detailed breakdown of expenses and resource allocation, offering insights into how company resources are utilized. By assigning costs to specific cost centers, management can track and evaluate each business area’s return on investment (ROI). Ultimately, FAVR enables companies to optimize their financial management by providing a clear and accurate picture of how money is spent in various areas of the organization.

How to calculate a FAVR allowance?

FAVR programs enable employees to use their vehicles for personal and professional purposes, allowing driver choice. Under a FAVR vehicle reimbursement program, drivers are reimbursed based on the cost of a benchmark vehicle. This benefit gives drivers the flexibility to purchase or lease their preferred vehicle.

For starters, there are two main components to a FAVR Vehicle Reimbursement Program. 

  • Fixed reimbursement: The fixed rate includes depreciation from a benchmark vehicle, insurance down to 44,000+ zip codes, and license, registration, and property tax by state.
  • Variable reimbursement: Cost of fuel, maintenance, and tires per mile— this is based on mileage driven each month.

 Click here to learn more about how we calculate FAVR allowances.

Why trust 

At, we are experts in simplifying the complex process of calculating FAVR allowances. Here’s why you should trust (ARC) to streamline your vehicle reimbursement program. 

  • The reporting functions specifically focus on cost-center reporting, enabling large companies to identify and contain company expenses actively.
  • ARC’s exclusive database of over 200 benchmark vehicles, including sedans, SUVs, electric vehicles, and trucks, allows us to create FAVR reimbursement plans for any industry.
  • Geographically sensitive vehicle data down to 44,000 zip codes. 
  • updates over 29,000,000+ points of data annually.
  • ARC system offers comprehensive reports and cost center reporting, enabling you to optimize your expense management easily.
  • Tailored company policy to ensure driver compliance and reduce the risk associated with drivers on the road.
  • Our mobile software is easily accessible from any device, whether a phone, tablet, laptop, or desktop.
  • Track and record your mileage with MileIQ.
  • As a 100% employee-owned company, ARC provides standard white glove service to all clients, ensuring we answer all customer service requests on the same day. It’s that simple!
Want more information on 

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