Certified Relocation Professional (CRP) Practice Exam

What is a key benefit of the lump sum approach to relocation cost reimbursement for corporations?

1. Increased administrative complexity

2. Potential for cost savings

3. Increased requests for policy exceptions

4. Higher tax gross up for moving expenses

The correct answer is: Potential for cost savings

A key benefit of the lump sum approach to relocation cost reimbursement for corporations is the potential for cost savings. This method allows organizations to provide employees with a predetermined amount of money, enabling them to manage their own relocation expenses. By giving employees flexibility in how they allocate these funds, companies often find that they can avoid the higher costs associated with traditional reimbursement models, such as covering specific moving expenses or managing detailed expense reports. Additionally, the lump sum approach can simplify the process of relocation for the employer by reducing administrative burdens. There is often less need for extensive record-keeping and auditing of expenses, which can lead to efficiency gains for the HR department. Combining flexibility with potential cost reductions makes this approach appealing for many corporations looking to streamline their relocation policies while supporting their employees during their transition.