Is your expenses policy giving staff a raw deal? We compare some of the most common expenses policies, the impact they have on staff morale, and how you can manage expenses better to avoid any headaches for HR.
When it comes to travel expenses, nearly everyone involved thinks they’re the good guy. Financial directors are stringent and employees are unashamedly spending company money to do their job away from the office.
Travel and expenses policies are creatures unique to their environment and even the most functional expense policy is prone to the odd hiccup or HR nightmare. Everyone has a friend of a friend with an out-of-pocket, missed flight, or bottle of Bollinger-themed horror story.
“I was recently promoted to become an IT training manager, and travel to and from Manchester every week. I didn’t realise when I took the step up that I’d pay for my own petrol, car hire, hotel and food upfront and get reimbursed in my salary. It costs more than £500 a month. This means I’m frequently out of pocket. I start most months overdrawn and I often feel panicked about my financial situation. Last month I had to visit accounts and grovel for a more workable solution.”
When employees pay their own way and claim back expenses, the company credit card remains mint and crisp, as if it’s never been stuffed into a Waitrose point of sale (POS) machine. This policy might work if your staff have minimal expenses, or if you’re able to reimburse at lightning speed. However, when frequent business travellers are expected to spend their own wages and there’s no urgency to reimburse, you may end up with overstretched (and unhappy) staff.
Did you know that employees who pay up front often think they pay tax on their claimed expenses twice? Once for taxed income, and again when it’s reimbursed in the next pay packet. Take time to talk employees through their payslip and explain exactly how claim-back expenses work in practice.
“I work in a private client law firm in a high street-based office, servicing an elderly community for their wills and the needs of their families. As such, we have a healthy petty cash pot for sundries to make clients feel comfortable at a difficult time in their lives. However, there’s a rotation of solicitors from our head office who misuse the fund, treating themselves to lunch, wine and coffees. Most justify their spending by citing that the location of the office. It isn’t their usual place of work, so they’re entitled to the money.”
Every good petty cash policy records spend and collects receipts. But, it’s understandable that small floats can go unmonitored especially if the finance team is swamped with employees arguing for tea and coffee money. But having petty cash doesn’t need to mean releasing control to reckless spenders. Consider replacing cash with an office prepaid corporate card to give finance transparency over how petty cash is used and deter any misuse.
“I spend two weeks a month working remotely in Japan and I’m advanced Yen for my expenses. However, company travel policy dictates I must fill in a paper version of a claim form immediately after I return, to prevent my firm claiming back the advance from my salary. Payday always falls when I’m away and obviously I’m not there to fill in the form. You could set your watch by how frequently I’m out of pocket.”
Time spent untangling cash advance payments gone awry is both time consuming and confusing. It becomes a problem particularly when firms are advancing international travellers in a variety of currency. Inevitably when the business traveller returns to the office, they arrive with unspent change. Accounts have unwittingly started a bank of small-denomination foreign currency they’re unable to sell on to an exchange provider.
“After a huge news story, we tried to run a reactive marketing campaign within 24 hours. The supplier wouldn’t invoice and the company credit card is capped at £2,500. Our project came in at £4,000 to execute. As it turned out, the process to gain the extra £1,500 would exceed 24 hours. We were sitting ducks, and retired the project.”
Exceptional circumstances require a reactive solution. Rather than relying on slow transfers or waiting for the cap on the credit card to be altered, a prepaid card allows for instant top up and payment allowing both for smaller and larger expenses. A capped credit card has its benefits, but one size doesn’t fit all.
“I constantly have a company credit card. I feel secure because no matter what the trip throws at me, I can handle it financially. For example, I arrived at the hotel in Budapest and the firm hadn’t booked my hotel. No problem, I’ll put it on the card. Same thing when I miss my flights, or there’s a timely conference I want to attend. I never really know how much is too much to spend, but I definitely don’t worry about an extra glass of wine in the evening. I work really hard and the flexibility I’m afforded makes me feel verified and valued.”
A flexible and uncapped company credit card policy allows consultants and business travellers to spend as they go, but the risk and unlimited credit attached to it is enough to make finance teams weep. Swapping the company credit card for a corporate prepaid card gives an employee pride they’ve been trusted, and gives them ownership of their expenses but accounts need to firm up the spending guidelines too. ‘Pretend it’s your own money’ isn’t sufficient to stop overspend.
If you’re having trouble with your expense management policy, consider using the FairFX Prepaid Corporate Mastercard®. Only give staff the funds they need, when they need them. Staff can request a top-up on their prepaid card whenever they need extra funds and you can approve or reject they reques just as easily, wherever you are. Plus, you get greater transparency over spending with our integrated Expense Platform.