By Jon Jorgensen, Group Director, Access Group
Expense management is often seen as a dull yet necessary task, but did you know that badly managed expenses processing is actually costing employees and businesses money?
Access Group’s research found the process of claiming expenses is costing employees £45 a year owing to interest charges while waiting to be reimbursed by their employer. With 46 million people employed in the UK, a collective £2.1 billion is lost by workers every year.
The process of filing expenses claims has probably never attracted anyone to a new job. However, when handled poorly by the employer, it is guilty of causing low morale and job dissatisfaction.
Then there are the tangible costs to the business: without a modern system for managing employee expenses, any system in place is often bucked or ignored all together, procurement of goods or supplies becomes impulsive rather than planned and decisions take longer to make. Worst, cash flow can be erratic and businesses risk overspending.
The big question is what steps can we all take to ensure that the processes are in place to save costs for business and employees?
The effects of poor expense management
Our research based on a survey of more than 2,000 UK workers revealed erratic corporate expenses policies that weren’t always followed, claims that were refused when a receipt couldn’t be produced and finance departments that need regular chasing.
Consequently, workers are left out of pocket — more than £400 per year for some individuals. As a result, businesses risk a floundering reputation as well as an increased recruitment bill.
The study of expense submitters also revealed that almost half of UK workers (46 per cent) have landed in financial difficulty because of money lost to expenses. 13.5 per cent had to cut back on essentials such as food, 8.7 per cent were unable to pay a bill, 8.6 per cent fell into mortgage or rent arrears, while 8 per cent turned to a pay day loan company to tide them over until their employer reimbursed them.
The average waiting time for expenses to be paid in the UK is 3.3 weeks, while over 20 per cent of people spend a total 6.3 weeks chasing their employer before they are paid what is owed.
40 per cent of UK workers also admit to having lost receipts meaning they are unable to claim on business expenses. Employers on average lose £17 each year through lost receipts, adding a further £512.5 million to the money collectively lost by UK workers each year.
Paying for goods or services up-front out of their own pocket only to be reimbursed later by their employer is a reality for the majority of workers in the UK. Now it transpires millions of hard working people are being left out of pocket by delays in payment.
Many businesses are quite simply working inefficiently, which is not only costing businesses time, resource and therefore money, but also employees. At a time when so many are already struggling financially, British businesses should not be adding to those pressures simply because of a lack of efficiency over a routine business process.
Can we save ourselves and our employee’s time and money?
The personal toll for workers when businesses lack an adequate system for handling expenses is often more than the annoyance of a few pence lost here and there. The financial loss can be huge and so too can the impact on personal lives, affecting the very fundamental human needs of accommodation, food and relationships. Those afflicted lose faith in their employers and even walk away from their jobs.
The business case for a smart expenses solution is clear. After all, the less time employees spend inputting and submitting expenses, the more time they have to focus on their core job. Key to this is making the expenses process as easy and quick as possible for both employees and the business.
Ultimately, businesses — and employees — need software that simplifies submissions, accelerates approvals, contains costs and can be used anytime, anywhere to instantly log purchases and receipt copies as they are made.
Those businesses that fail to act are risking their own bottom line through wasted time and therefore money spent on the expenses process. They also risk losing their talent pool of employees – 12.45 per cent of UK workers say that losing money through expenses has caused them to lose trust in their employer. Quite simply, businesses cannot afford not to use an efficient expenses management