Managing Expenses when Ringing in the New Year

By Thore Vestergaard, SVP and MD, Commercial Cards, FLEETCOR

Thore Vestergaard, SVP and MD, Commercial Cards, FLEETCOR

When it comes to expenses reconciliation, SME employers need to understand the potential consequences of festive frivolity.

December can be a month filled with more business expenses than most. Weeks of travelling to end-of-year meetings, taking clients out for lunch and attending Christmas parties makes the festive period a financially demanding time, which can quickly take its toll on employee expense bills.

It is employees, however, who are regularly bearing the brunt of these increased expenses, whilst awaiting a tidal wave of reconciliation in January and February. But do employers realise the potential impact the far too common “pay and reclaim” process can have on their staff members’ pockets, and in turn, morale?

Paying the price for ineffective expense policies

Our recent research at Allstar Business Solutions has highlighted that more than half (57 percent) of employees said they faced financial difficulties as a result of regularly being out of pocket in 2018. Those that travel as part of their job also said they would like their employer to take more responsibility for paying expenses before or during business road trips.

Unfortunately, this doesn’t always happen, and the increased financial burden—as a result of ineffective expense procedures—paired with an early payday for employees in December can add to financial pressure further down the line for employees. In fact, it can often take more than four and a half months for British workers to clear the debt that builds up over Christmas.

Lasting effects of the January blues

Due to the culmination of cold, dark nights, the arrival of December bills and the extended time between paydays, the early months are widely considered the most depressing of the year.

"It’s crucial for SMEs to have a solid expense policy in place to manage on-the-road expenses effectively"

With morale already running low in the New Year, businesses need to be aware that the strain of fronting expense costs may be making those post-Christmas blues that little bit harder for employees—who already have their own financial challenges to worry about. A staggering 80 percent of people agree that having to front the working capital of the company somewhat negatively affects how they perceive their employer. And, of those, a quarter (26 percent) are likely to seek employment elsewhere because of this.

Together, these factors serve to create the ‘perfect storm’ for employees, ultimately impacting workforce morale and productivity. So, what can be done to ease the burden for employees, without compromising on control and efficient cash-flow management for businesses?

The key ingredients of an effective expense policy

It’s crucial for SMEs to have a solid expense policy in place to manage on-the-road expenses effectively. When it comes to compliance, educating employees about the rules and boundaries is of course an important factor, but keeping things simple and straightforward is key. Employers also need to regularly review and update their existing policy, to ensure that it reflects current legislation and functions appropriately in line with current business operations.

Almost 60 percent of the employees Allstar surveyed admitted to intentionally overclaiming when submitting their expenses. So set clear boundaries by making the policy transparent, fair and workable. Whilst not everyone may agree with the limits in place, clarifying the rules can eliminate any questions or grey areas.

Most importantly, harnessing an intelligent tool such as a business charge or credit card can go a long way towards improving expense processes through automation. This allows organisations to manage their working capital more effectively, without employees having to front the bill.

By opting for a combined business and fuel expenses card like Allstar Plus, employers can benefit from cost savings, better cash-flow management and end-to-end process automation. Additionally, they are able to maintain visibility and control over all fuel and on-the-road expenses made by employees.

A solution for business and on-the-road expenses

The Allstar Plus card ensures that employees are free to make any payment they need to, within the limits the employer has set.

At the same time, employers have total control at card level over where it can be used and how much can be spent per expense category—including transportation, accommodation and supplies—on a daily, weekly or monthly basis. Best of all, purchases are interest free for up to 44 days, so businesses no longer need employees to foot the bill first, to stay on top of cash flow.

In a bid to further ease some of the financial pressure that SMEs are facing, the card also offers cost savings and discounts on a variety of purchases. These include discounts on diesel to lower the cost of fuel at the pump, and deep discounts on vehicle maintenance and repair work, tyres and hotel accommodation, through pre-negotiated deals with leading, nationwide suppliers. Improving expense practices for 2019.

With these tips in mind, SMEs can successfully ensure that employees are not bearing the business expense burden next Christmas.

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