A colleague of mine recently shared a story about employee reimbursements. When she was just 22 and starting out at another company, she had to make a large payment for some equipment for a project at work. Her rent came out on the 25th, but the employee reimbursement from her company didn't arrive until the last day of the month.
It's not good to let your team, especially your junior team members, pay for products and services for work with their own money. And not just because it can leave them in a precarious financial position, but because it stops your business from having visibility or control over spend.There are several challenges regarding employee reimbursements, and here are the top five.
As we explored above, it can be pretty painful for employees to use their own funds for work. Yes, some employees like it; they get rewards and benefits from their credit cards for spending money that they will get back. But overall, it creates a lot of tension. In the UK in 2019, 35% of employees were still being asked to use their own money to pay for business expenses. When employees have to pay using their own money, it can leave them short of funds and waiting for days, and even weeks, to be reimbursed. In these cases, employee morale is low. Instead of focusing on their work and output and feelingempowered to spend for work, they're worried about money and making ends meet.
So, your employees are out doing their jobs and spending their own money for work. Obviously, you or your finance team will pay them back once they submit their expenses, receipts, etc. But what if you're not happy with what they spent and there wasn't a clear and easy to access policy? The money's already been spent.You didn't have visibility over what was bought or control over how much was spent. Also, how can you close your month effectively when you don't even know how much has been spent until the last few days? And, that's if everyone actually submits their expenses on time. It's a mess.
As per the point above, it's hard to control spending when employees are spending from their own pocket, and the company is reimbursing weeks later. With Payhawk company cards and the supporting software, you can set workflows and spend controls. What are Payhawk’s spend controls?
Receipt management is a challenge for both employees and finance teams. How can you expect an employee to hang onto all of their receipts for a month in order to submit their expenses and get reimbursed? Anecdotally, I met a lot of people at the MWC, Barcelona, who were saving their receipts and filling the details in on a spreadsheet — and then posting them to the finance team in their head office.With Payhawk, you simply spend with the company card, snap a photo of the receipt for the app, choose your spend category, and you're done. The OCR tech within the app pulls the data out of the receipt, so the finance team has everything they need to close the month or get audit-ready. There is no receipt chasing, no saving receipts, no lost receipts, and definitely no hours of manual data entry.
That brings us to everyone's number one topic, data entry. Manually entering expense details or trying to connect separate apps and software is a nightmare. At Payhawk, the OCR automatically pulls all the relevant info from receipts and invoices into the software so the finance team can focus on more meaningful and productive tasks.What's more, Payhawk integrates with all of the most popular ERP and accounting systems, meaning that the correct data is pushed into the correct system with minimal effort. What about those times when employee reimbursements are 100% necessary? At Payhawk, we understand that these occasions pop up now and then. Say, for example, where you have an employee who doesn't typically spend for business, and they need to make a payment. Thanks to our one-click employee reimbursement, you can pay the employee directly into their bank account quickly and simply.Ready to learn more about easy expense management and employee reimbursement? Book a demo. Or download the data-driven decision-making checklist to learn more about the importance of visible spend data and controls.
Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.