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23 Jun 2023

Everything you need to know about mobility budgets

Everything you need to know about mobility budgets

What are mobility budgets in a nutshell?

Mobility budgets are an innovative approach to managing employee travel expenses within a company. Instead of providing traditional travel allowances or reimbursements for specific modes of transport like flights or trains, mobility budgets allocate a set amount of money to each employee for their travel needs.

With a mobility budget, employees have the freedom to choose their preferred transportation options, whether it's taking a taxi, using public transport, renting a car, or even using ride-sharing services. The idea is to empower employees to make their own travel decisions based on their individual needs and preferences.

How are mobility budgets allocated?

The mobility budget is typically an annual or monthly allowance provided to employees. It covers not only transportation costs but also other associated expenses like accommodation and incidental costs during business trips. By consolidating these expenses into a single budget, it simplifies the administrative process and provides employees with flexibility.

What is the goal of mobility budgets?

The aim of mobility budgets is to encourage more sustainable and cost-effective travel choices. Employees are encouraged to consider factors such as cost, convenience, and environmental impact when making travel decisions. It also promotes a shift towards greener transportation options, such as public transport or cycling, reducing the overall carbon footprint of the company.

How are mobility budgets implemented?

From a travel manager's perspective, implementing mobility budgets requires careful planning and budgeting. It involves setting the appropriate budget limits for each employee based on their role, travel requirements, and the company's overall travel policy. Regular monitoring and reporting help to ensure compliance and identify any areas for improvement.

Can mobility budgets work as a complement to company cars?

While company cars have traditionally been a common perk for employees, introducing mobility budgets alongside them can offer additional flexibility and choice. Mobility budgets provide employees with a predetermined allowance to cover their travel expenses, allowing them to choose the most suitable mode of transportation for each trip.

This means that employees who have access to company cars can still opt for alternative options when it better suits their needs, such as using public transport for shorter or more congested journeys, or utilising car-sharing schemes for collaborative trips.

By incorporating mobility budgets, we empower employees to make travel decisions based on factors like convenience, efficiency, and environmental impact. It promotes a more sustainable approach to business travel while maintaining the convenience and benefits of company cars.

Travel resources can be allocated more efficiently by considering the specific requirements of each trip. This synergy between mobility budgets and company cars means that employees have the freedom to choose the most appropriate mode of transportation for their specific circumstances, while optimising cost-effectiveness and sustainability within your travel policy.

5 ways that mobility budgets benefit employees

1. Flexibility and personalisation

Mobility budgets give employees the freedom to choose the transportation options that best suit their individual needs. Whether they prefer public transport, cycling, or renting a car, employees have the flexibility to make travel decisions based on factors like convenience, timing, and personal preferences. This autonomy leads to a more personalised travel experience, increasing employee satisfaction and overall well-being.

2. Cost control

With a mobility budget, employees are given a fixed amount of money to cover their travel expenses. This encourages them to be mindful of their spending and make cost-effective choices. By considering the most efficient modes of transportation or sharing rides with colleagues, employees can stay within their budget and even save money.

This not only benefits the company's bottom line but also empowers employees to make smarter financial decisions that allow them to spend money on what’s important to them.

3. Combining business and leisure (Bleisure)

Mobility budgets can contribute to better work-life balance for employees. By providing a set budget for accommodation and travel, employees can choose options that align with their personal preferences and comfort levels. They can select accommodations that cater to their needs, whether it's a cosy bed and breakfast or a business hotel with additional amenities.

This flexibility allows employees to create a travel experience that balances their work obligations with personal well-being, leading to improved job satisfaction and reduced stress. Employees can also choose to spend over their budget on their own card, which means they can choose to upgrade, take a more expensive option, or turn a business trip into a longer break without being limited to set travel times and dates.

4. Sustainable travel

Encouraging sustainable transportation options is a key benefit of mobility budgets. By incentivising greener choices like public transport, cycling, or even walking shorter routes, companies can significantly reduce their carbon footprint and contribute to a more sustainable future.

Employees who are empowered to make environmentally friendly travel decisions feel a sense of satisfaction in being able to travel according to their own values, which can enhance their engagement and morale.

5. Streamlined admin

Mobility budgets simplify the administrative process for employees. Instead of submitting expense reports for each individual part of a journey, employees can manage their travel expenses within their allocated budget.

This reduces the administrative burden for both employees and the company, saving time and effort in expense management and reimbursement processes.

Your step-by-step guide to implementing mobility budgets

1. Make sure you know what a mobility budget involves and how they work alongside company cars

To successfully implement mobility budgets, it's crucial to have a clear understanding of the concept and how it relates to existing company car policies. Mobility budgets provide employees with a predetermined budget to cover their travel expenses, including transportation, accommodation, and incidentals.

This budget allows employees the freedom to choose their preferred modes of transportation. Take time to look at the rules, benefits, and implications of mobility budgets, especially in terms of how they interact with company car schemes.

2. Look at the complete mobility requirements of your company and individual employees

Before implementing mobility budgets, analyse your company's specific mobility requirements. Consider factors such as employee commuting distances, the frequency of business trips, and the destinations typically travelled to.

This analysis will help you gain insights into the types of transportation options that would best serve your employees' needs. Consider conducting surveys or engaging in discussions with employees to gather valuable input and identify their preferences.

3. Consider which travel options can match the needs of your employees as well as business goals

Once you have a clear understanding of your company's mobility needs and current programme, evaluate the various travel options available. Assess the feasibility and suitability of public transport, car sharing schemes, cycling infrastructure, and other modes of transportation.

Consider factors such as accessibility, convenience, cost-effectiveness, and sustainability. Identify the transportation options that align with your employees' preferences and support your company's goals.

4. Speak to all the main colleagues and departments that are involved in business travel

To ensure a successful implementation of mobility budgets, engage in open discussions with key colleagues and departments involved in organising business travel. Collaborate with HR, finance, and procurement departments to understand how mobility budgets fit into the broader travel management framework.

Consider the impact on travel policies, expense management processes, and reporting requirements. Gathering input as addressing concerns early on will facilitate a smooth integration of mobility budgets into existing procedures.

5. Look at the impacts of a mobility budget on the car policy and the rules around it

Examine the implications of introducing mobility budgets on company car policies. Assess how the budget allocation may affect the utilisation of company cars and determine if adjustments or revisions to the existing policies are necessary.

Consider the potential impact on the insurance coverage, maintenance, and tax regulations associated with company cars. This evaluation will ensure a coherent and consistent approach to managing different modes of transportation within your organisation.

6. Review the extent of the mobility budget and whether it could apply to colleagues who don’t have a company car

Review the extent of the mobility budget and consider whether it should apply to all employees, including those who already have access to a company car. Assess the budget allocation based on job roles, travel frequency, and employee needs.

Strive for fairness and equality in distributing the mobility budgets, ensuring that all employees have access to suitable travel options that meet their requirements.

7. Involve everyone in your discussions so everyone’s aware of the tangible benefits

To garner support and create a sense of ownership, involve all relevant stakeholders in discussions about mobility budgets. Highlight the tangible benefits, such as increased flexibility, personalised travel experiences, cost control, and sustainability.

Emphasise the positive impact on employee satisfaction, work-life balance, and the company's environmental footprint. Engaging stakeholders throughout the process will foster a sense of collaboration and enable you to address concerns and obtain valuable insights.

8. Calculate the total cost of your proposal and compare this with present travel costs, from company cars, trains, taxis, bikes and scooters

Perform a comprehensive cost analysis to determine the financial implications of implementing mobility budgets. Calculate the total cost of your proposed budget and compare it with current travel expenses, including those associated with company cars, trains, taxis, bikes, and scooters.

This analysis will provide a basis for evaluating the potential cost savings, identifying areas of inefficiency, and making informed decisions regarding the mobility budget allocation.

9. Make sure that your managers look at the effect of other travel modes on employee and company tax

Ensure that your managers assess the impact of different travel forms on employee tax and company tax. Consult with tax experts or seek guidance from relevant authorities to understand the tax implications associated with mobility budgets.

Consider any potential changes to tax liabilities and employee benefits resulting from the introduction of mobility budgets. Adhering to tax regulations and providing clear guidelines will help employees make informed decisions and prevent any unexpected tax issues.

10. Get assistance from professionals to make the process simple  

Implementing mobility budgets can be complex, involving various stakeholders, financial considerations, and policy changes. Consider seeking assistance from the team at Mobilleo where we can find you a personalised solution that works for your business.

Our expertise and experience in this area can simplify the organisation and implementation process of mobility budgets, ensuring a smooth transition and a successful integration of mobility budgets within your company.

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