How are mileage expenses calculated?

In many countries, distance traveled with personal or corporate vehicles is a valid business spend. The most common way to reimburse mileage costs is to calculate the distance traveled and assign a corresponding rate per kilometer (or mile), giving the total amount to be expensed.

Yokoy manages mileage cost reimbursement using mileage rates. Yokoy admins can set up multiple mileage rates as required to handle various scenarios such as different reimbursement rates for electric versus combustion vehicles, or for sole drivers versus drivers with additional passengers.

Mileage rates are assigned to employees via employee policies. An employee policy can have one or more mileage rate assigned.

To calculate mileage reimbursements, Yokoy takes the destination and arrival location (from/to addresses) entered by the submitter, assigns the correct mileage rate, and calculates the amount to be expensed by multiplying the distance by the rate per kilometer (mile).

When creating a mileage expense, submitters can enter distances manually or calculate the distance automatically based on the departure and arrival locations by clicking Calculate the distance.

Yokoy uses the Google Maps Directions API to calculate the distance traveled between locations, according to the best/fastest route. It does not avoid tolls or highways when calculating the distance.

The route used to calculate the distance is shown on the map. A return journey can be simulated in mileage expenses by selecting the Round trip (double distance) checkbox, which simply doubles the distance calculated between the start and end location.

For auto-calculated distances in mileage expenses and trips, submitters can manually override the distance by entering the number of kilometers (miles) in the Distance (one way) field. Yokoy admins can set up a compliance warning to detect any manual entries that exceed the auto-calculated distance by a given percentage.

Yokoy admins can set a threshold (%) by which manually entered mileage distances may exceed the auto-calculated distance provided by Google Maps in Admin > Company > Compliance.

The compliance message is only displayed when the user has automatically calculated the distance, either by clicking Calculate the distance or selecting the Calculate mileage claims (to next stop) checkbox. If the user enters the distance manually, the message is not displayed.

Mileage rates are set up in Admin > Mileage rates. Only Yokoy admins with admin user permissions can edit mileage rates.

Mileage rates can be valid indefinitely or valid for a fixed period (Valid from/to).

There are two types of mileage rate that can be used to calculate mileage costs:

With this mileage rate type, a single fixed rate is applied per number of kilometers driven by the submitter. For example, 0.30 EUR for every kilometer driven. The amount paid then is directly related to the number of kilometers driven:

In some countries, instead of a global rate for all types of vehicles, there may be a single rate for different criteria:

With the fixed rate, the rate is applied for the entire distance entered in the mileage expense. For example, with a mileage rate of 0.300 EUR/km, if an employee takes a trip from Barcelona to Stockholm (2746.4 km), then the reimbursement is calculated to be 823.92 EUR.

The stepped mileage rate type is a variable rate that depends on the number of kilometers driven. You can set up multiple intervals with different reimbursement rates. When the number of accumulated kilometers exceeds the threshold of one interval, the rate of the next interval is applied for the subsequent number of kilometers.

For example, customers can set up a range of intervals, such as:

If an employee takes a round trip from Barcelona to Stockholm (2746.4 km x 2 = 5492.8 km) with stepped mileage rate:

The reimbursement is calculated as follows:

Total reimbursement: 1627.48 EUR

Yokoy controls the number of kilometers (miles) entered as part of mileage expenses or trips by employee. Yokoy tracks an employee’s accumulated mileage over a given period using an internal counter. The mileage counter can be configured by the Yokoy admin (Admin > Company > Expense report definition) to be reset at the end of every month, end of the year, or never.

The eligibility of a mileage rate for a mileage expense is determined by three factors:

When employees create a mileage expense, Yokoy tries to automatically assign the correct mileage rate based on its eligibility. Only rates whose minimum number of kilometers matches the employee’s mileage counter are shown. For example, a Yokoy admin has set up these mileage rates:

If the employee’s accumulated mileage counter is 20000 km, only mileage rate A is eligible. The maximum mileage determines the cutoff rate after which a mileage rate is no longer eligible for application.

If no minimum or maximum number of kilometer is set in the mileage rate, the mileage rate can be used in all mileage expenses created by the employee.

Where a Yokoy admin has set up multiple mileage rates with similar minimum and maximum mileage, the order in which the mileage rates are selected can be determined by setting a value in the Mileage rate priority field. The higher the value, the higher the priority the mileage rate has over other eligible mileage rates.

Yokoy admins can establish a minimum threshold for reimbursement of mileage for a journey in a trip using the Minimum distance to travel to apply mileage checkbox in Admin > Company settings, Enable trips. If set, Yokoy only calculates mileage after an initial distance has been traveled. In other words, mileage is only calculated after the submitter has driven the distance specified as part of a trip.

As an alternative to setting up a stepped mileage rate with a zero rate for kilometers (or miles) traveled up to a specific threshold, you can set the minimum distance for reimbursement in each mileage rate in which you indicate to Yokoy the number of kilometers to be ignored before starting to calculate the reimbursement.

For example, if an employee travels 121.57 km. The company uses a simple mileage rate of 0.16 EUR per kilometer and sets a minimum distance for reimbursement of 100 km.

The calculation for reimbursement is as follows:

Mileage rates can have a global scope or be country-specific (Applicable countries). By default, rates are applied globally.

You can set up a mileage rate that applies to a specific country only. For trips taken within the country, that mileage rate is applied. For cross-border trips, several mileage rates may be taken. For example, you may want to set up separate mileage rates for Germany, Switzerland, and France.

If an employee takes the following journeys, Yokoy calculates the applicable mileage rate as follows:

Mileage expenses may or may not include tax (VAT) according to the country. You can choose whether VAT is applicable to mileage expenses by going to Admin > Company, Enable VAT input tax deduction, and selecting the Enable VAT for mileage expenses checkbox.

In mileage expenses generated as part of a trip, VAT can be automatically populated by enabling Auto generate VAT for mileage expenses. In mileage expenses created individually, users must enter the corresponding VAT amount manually.

Managers and finance users can generate a report on mileage expenses in Analytics. The report displays the distance traveled as a dimension.

To generate a mileage report:

You can download the generated report by clicking the report link displayed in the Results section.