Tired of pandemic-forced changes to business as usual? Get over it. There’s no going back to life before COVID-19 and, with work-from-home standing as a world-changing souvenir of this bizarre period, workforce spend management is undergoing monumental modifications.
“Studies suggest that close to 40 percent of all employees in the United States and the United Kingdom use their own money to pay for work expenses, and that the average business transaction costs them well in excess of $100. This can be both frustrating and financially challenging for many, as there is no guarantee that they will be reimbursed for their expenses on time once purchases have been made,” according to the inaugural edition of PYMNTS B2B Workforce Spend Playbook: A Guide To Modernizing Everyday Spend, done in collaboration with Conferma Pay.
The new Playbook examines how companies are doing away with the “invisible bank of the employee” where workers float corporate expenses out-of-pocket, then wait (and wait and wait) to be reimbursed.
It’s a surprisingly widespread problem. Modernizing corporate spend is the solution.
Before companies can wean themselves off “the invisible bank of the employee” it’s necessary to make system decisions based on the situation (COVID), and the available tech tools.
Observing that spend management systems in use today tend to be archaic, Simon Barker, CEO of Conferma Pay, told PYMNTS, “Old-school methods of managing expenses became infeasible when lockdown mandates issued in March sent individuals across the globe to work from home. This has created demand for digital spend systems to support the new work-from-home ecosystem. Payment decision-making is often centralized, but five months into [COVID-19], the controls you need to decentralize payments have to be put in place,” he said.
These factors, among others, are bringing more companies around to the benefits of corporate spend management platforms, particularly at a time when every cent must be accounted for.
“Countless digital spend management solutions have entered the market to meet this growing demand. Some have taken the form of subscription offerings, which give businesses greater transactional visibility by allowing them to view their staff members’ past, current and planned expenditures in real time,” per the new Playbook.
“The usage of virtual cards that enable companies to set spending limits is also expanding, with the number of such transactions expected to increase 11 percent by the end of the year.”
Stalling Isn’t A Strategy
Cash flow shortages have ripple effects that can swamp some boats along any supply chain. “Research shows that 19.9 percent of SMBs with brick-and-mortar presences have delayed payroll payments to alleviate the strain on their finances,” the Playbook states, “while 18.1 percent have stalled supplier payments. This means that individuals must often wait to receive paychecks, while suppliers are left to manage cash flow shortages of their own.”
That’s the beauty of digital spend management tools, which are helping small and medium-sized businesses (SMBs) especially track limited financial resources and overcome logistical issues stemming from legacy payment methods.
And, as more individuals work remotely, “These workers can send forms, files and payments via emails, digital messages and virtual cards much faster than what is possible with paper-based methods,” according to the new B2B Workforce Spend Playbook.