Businesses incur all kinds of financial costs in order to run their operations and grow. Payroll, rent, invoices and cost centers are closely monitored and balanced by the revenues of the business.
There is one type of cost, however, that businesses often fail to successfully account for and control – employee expenses.
Employee expenses have always been hard to estimate and control. And because giving credit cards to employees has traditionally been both laborious and risky, most businesses still rely on expense claims where employees front their own money.
However, this solution fails to serve the business and the employees. Finance teams have little visibility and control, whilst employees have an unclear and inconvenient process to juggle, losing focus on the big picture.
Payhawk’s expense management solves this problem in two ways – providing an alternative to employee reimbursements (corporate visa cards), and making employee reimbursements better when they do need to happen.
What are employee reimbursements?
Employee expenses are costs incurred by employees that need to be reimbursed, usually following a process of the claim made by the individual, and processed by the finance team. Every payment the finance team makes to the employee is an employee reimbursement.
Companies set their reimbursable expenses in their expense policy, a document that details the costs that employees can claim back to the business, alongside limits and usage contexts. For example, the policy can determine how much an employee can spend on dinner when travelling away, or the reasons they might request overnight accommodation.
Pitfalls of employee reimbursements.
As hinted above, employee reimbursements come with many pitfalls; it’s important to understand all the ways in which employee reimbursements can be harming the business.
There’s no control over spending
Employee reimbursements work after the fact.
There is no in-built control over spending, as teams and individuals go about their days doing their jobs and spending money: gifts for clients, social time for teams, or travel expenses – they all add up!
Even with well-written expense policies, employee reimbursements fail both the finance team and the company at large. Finance teams can’t control what’s spent before it is spent, and the teams are never sure where they stand.
It uses your employees’ personal funds.
Asking your employees to use their own money is not uncommon. However, it can leave the most vulnerable at risk of missing personal payments or overdrafts.
And, even if that only happens in edge cases, employees don’t enjoy it as it places yet another responsibility on them: keeping receipts safe and regularly making claims using the time away from key projects they’re immersed with.
Asking employees to keep paper receipts
Employees can miss out on reimbursement in a few ways – forgetting to ask about the receipt is one, but losing receipts is also too easily done. For most companies, this is the end of the line for the employee who will now be out of pocket and understandably frustrated.
Keeping receipts can prove trying fairly quickly, especially on international travel. Experienced employees know that losing a receipt can mean losing a claim, so they will retain as many paper receipts in their wallets as possible, stressing over their safe keeping.
But that doesn’t make for a quick claim when back in the office.
Lengthy admin for employees
Given a sound system for employee reimbursements, claims can be a fairly easy process. Payhawk includes a specific solution for employee reimbursements that automates all data entry by scanning and reading – as if by magic – the receipt.
However, most companies are still using antiquated software and legacy systems. The process for these claims can be arduous and frustrating.
What is this saying about the experience of claiming expenses? Employees would rather lose money than go through the process.
Benefits of using Payhawk to optimise your company’s expenses.
Using smart expense management software such as Payhawk can solve expense management for businesses by eliminating the need for employee reimbursements in the first place. And for those cases where employee reimbursements are still needed: it enables employees to do it the right way.
Empower employees with company debit cards
Finance teams can issue physical and virtual debit cards to teams and employees. This empowers teams to do their jobs faster and more conveniently, without worrying about borrowing someone else’s card or using theirs.
Additionally, as employees are issued their individual corporate Visa cards, they don’t need to use their own money and submit a claim anymore, a bad experience for them. Instead, they can spend more time doing the all-important work the business wants them to be doing.
Instead, they enjoy the freedom of having their own next generation payment method, compatible with Google and Apple pay for swift mobile payments.
Consequently, employees feel satisfied, less stressed and more focused on their key tasks – not filling forms.
Keep control of spending
While empowering employees, you also gain more control over spending.
Because every card is associated with an employee, team or project, the finance team has full visibility of what’s being spent and where.
And not just visibility. Payhawk allows finance controllers to set rules and thresholds for the spend. For example, the marketing team can be given a limit in sync with their annual marketing plan. Or the operations team can be given a limited budget for the team wellbeing pot.
As a plus, the team also enjoys the freedom of well-set rules and controls – no more worrying about reading obscure expense policies in the dark corners of the company-shared files.
These are just some of the advantages of bringing your company up to speed in expense management: more control, and better-off employees in every sense of the word.