Corporate profits are at all-time highs and the markets are mad bullish. So why are companies “borrowing” $1.6 billion a month from employees, in the form of business expenses being paid with personal monies and reimbursed later? It’s an excellent question, and one that virtual payments outfit Conferma took to answering. What they found is pretty scandalous.
Calling workers “America’s Invisible Bank,” Conferma’s study found that close to 40 percent of the U.S. working population pays business expenses “…using personal means at least once per month…” with an average outlay of around $111. Roughly one-third of respondents said they get reimbursed within a week, but not immediately. A surprising number reported falling behind in household bills due to reimbursement delays, creating deep dissatisfaction – and even depression – among employers stemming from slow reimbursement of personal funds.
The findings substantiate what many already suspected, fanning flames of resentment over workforce expense policies. At least those flames are casting light on flawed, outdated (even paper-based) expense management practices, as reported in the latest PYMNTS Workforce Spend Playbook. In the age of platforms, more firms are consolidating expenses into dedicated solutions that address worker complaints and bring new transparency to spend management.
The Need For Change
It’s not as if corporate travel managers don’t get it. In The Journey to Integrated Travel Management report produced in 2019 by the Association of Corporate Travel Executives (ACTE) and American Express Global Business Travel, 72 percent of respondents said their companies have “somewhat” integrated travel management systems and policies. As that can mean lots of things, the better number to focus on is the 20 percent of travel managers who are still running mostly paper-based departments – with receipts stapled to forms. Yikes.
Thankfully, that method is on its way out. FinTechs are busy partnering up with financial institutions (FIs) to field true end-to-end corporate travel solutions. Bank of the West, a subsidiary of BNP Paribas joined with card technology firm Brex to pilot a co-branded corporate travel card with popular Brex features like digital receipt matching and integrations with commonly used accounting software. It’s not the definition of “end-to-end,” but it’s a long way from paper.
Food management and distribution titan Sysco was still using paper receipts less than four years ago, when the company went all-in on digital spend management. The company now uses three card products for associates (travel and expense, fuel and so-called “p-cards” for procurement), coupled with spend management software. Sysco is now enjoying a new ease and useful transparency with its end-to-end solution. “We are able to see the spend, help manage the spend and ensure that the spend is appropriate – and we are reimbursing for it in a timely way,” said Brent Anderson, Sysco’s senior director of finance policy and internal controls.
Happiness Is Spend Management
With two in five workers still shelling out their own money while traveling or transacting on company business and waiting – sometimes weeks – to recoup from their employer, something’s got to give. A tight labor market and hot competition for talent means these kinds of 20th-century annoyances don’t cut it anymore. More importantly, T&E has long been known as “the second-largest controllable expense” in business. Technology has finally caught up with that vision of a streamlined, centralized view of travel spending.
Sounds like a job for an integrated platform – and it is. Spend management tech is now rolling out left and right as companies grasp the savings in money, time and employee goodwill.
“Better spending tools help both employers and employees trust each other more, and that translates into a more productive, humane workplace – and a company that has both cash and staff to get to the next level,” according to Bento for Business CEO Farhan Ahmad.