Getting paid and reimbursed for expenses on time is directly related to employee satisfaction and retention. According to a study, 32 percent of SMBs have paid their employees late due to cash flow problems. And nearly one in five (18 percent) of employees who work for small businesses say they would quit after a single late paycheck.
The latest Workforce Spend Playbook showcases the shifting spend management solutions landscape and how improved services are affecting SMBs’ in-field expense management, back-office operations and bottom lines.
The strain of paying for work-related expenses out of pocket can have greater negative impact on hourly workers, gig workers and those who work in the field.
Field-Based Workers Need Faster Payments
Field-based work done by plumbers, landscapers, electricians and more is projected to experience rapid growth in the near future. The share of field-based construction workers alone is projected to grow at a rate of 12 percent from 2016 to 2026, faster than the overall average, according to the BLS.
Solutions that simplify expense and resource tracking will be valuable assets for workers in the field, especially considering the share of employees who spend much of their time outside their offices.
The trucking industry is just one such use case for tracking tools, with employees on the road for long stretches of time and companies operating under slim margins. The lack of immediate compensation can be a big issue for trucking companies, which often issue invoices with 30-day repayment timelines.
Mobile-based factoring is one solution used by the trucking industry to allow for faster payments on the road.
Gig Workers Struggle to Shoulder Expenses
Field workers are traditionally in construction, utilities or other such trades, but due to the rise in the gig economy, a lot more of the workforce now shares some of the same challenges as traditional field-based workers.
One of the most common pain points is having to wait days or weeks to get reimbursed for out-of-pocket purchases made on the job, such as fuel.
“It’s table stakes for anyone operating in an incredibly competitive labor market,” she said. “Making sure the individuals who are ultimately delivering the experience to the customer are well-equipped to do so is really critical.”
Employees are given payment cards so they can buy fuel for company delivery vehicles without having to file for reimbursements. The cards also include spend controls that limit how much can be purchased and provide real-time insights into how funds are being used.
“If the company is not reimbursing on a frequent basis, if you’re just coinciding with the pay cycle, the reality is you can put someone in a risky life situation,” said Mokri, echoing the late payment employee dissatisfaction connection previously cited.
Spend Management Solutions Are on the Rise
Spend analytics solutions, which can empower employees and allow companies to analyze spending and gain insights, represent a growing market. A recent report found the market is set to rise to an estimated value of $5.66 billion by 2026. Drivers of growth include increasing requirements for compliance and adherence to internal organizational rules, as well as the rise in AI and cloud-based services adoption.
A survey of U.S. finance professionals found that spreadsheets were the tool most commonly used to manage the entire expense process, with close to half (45 percent) using them. Only 21 percent use expense tracking software.
Not everyone is satisfied with this situation. Roughly one-quarter (26 percent) are happy with their current expense management process, saying “I wouldn’t change a thing.” However, only 7 percent of respondents say the process is so bad that it needs fixing ASAP.
Three-quarters of the CFOs in this study said they’d like more time for strategy and planning. Operational work like processing invoices and expenses and producing reports takes up a good deal of time and resources. Spend management solutions can reduce this load and also increase worker satisfaction.