Staff: the beating heart of an organisation…and a cheap line of business credit

Jane-Emma Peerless, Head of People at Caxton, explains why manual expense management might be the reason behind all that employee turnover

The business expenses welfare problem:

• 1 in 3 employees (35%) are forced to pay for business expenses themselves
• A third (38%) have experienced stress due to the time it takes to get their money back

Following the pandemic, we are all hiring like crazy, often finding that the best people in high demand and wage inflation is on the increase. HR teams across the UK are responding with an employee-centric agenda including flexible hybrid working and more sophisticated reward, recognition and engagement programmes.

Unfortunately, a lot of this work is being undermined by ingrained inertia in one particular area. Rather than building relationships and fostering goodwill many companies are adding financial stress by expecting staff to use their personal money to cover expenses, essentially providing the company with a free line of credit.

Research from Caxton shows 1 in 3 employees (35%) are forced to pay for business expenses themselves. If those expenses include travel, accommodation and meals we could be talking hundreds of pounds on top of their monthly outgoings.

With the rising cost of living due to energy and fuel, together with the increase in national insurance via the new Health and Social care levy which comes into force this month, employers are unwittingly loading staff with more financial stress.

This is good news for the business, which doesn’t need to worry about surcharges, overdraft fees and daily interest. Bad news for the employee, who does.

No wonder 1 in 3 have experienced cashflow issues as a result. A third (38%) have experienced stress due to the time it takes to get their money back.

I’m not saying companies intend to use employees’ bank balances as a line of credit. Most bosses would be aghast to find out that’s what their staff think. But they need to understand the impact of their expense policy, especially for people on lower salaries, and be especially thoughtful of staff wellbeing and mental stress.

Financial worries have a well-known link to mental health. Being stressed about money impacts self-esteem and work performance. It also fuels tension with other family members who may be impacted by household budgets.

Managers can never assume there’s money to spare for company expenses in an employee’s monthly salary.

I asked staff here at Caxton about their experiences (before they joined us of course – we give corporate prepaid cards to everyone who incurs cost on behalf of the business)

“I was running up and down the country spending £750 of my own money every month,” said one colleague. “It took ages to get my receipts in order and even when my report was perfect it would take six weeks to get my money back.”

“It doesn’t say a lot about a company, to be honest,” said another. “Especially if the company is a well-known brand or a large business – you question why they need you to spot them the cash!”

A quarter of UK businesses are still using manual expense reconciliation. A million companies are still asking staff to print out an expense form, fill it in by hand, then find and staple a bunch of receipts to it.

As you might expect, the smallest businesses are lagging furthest behind. Only 38% have made the jump compared to 9 out 10 of the largest companies. It is time for good HR and Finance managers – and business owners - to free up their employees' cash, and time – and better their own management of business expenses in the process, by implementing expense automation.

Asking employees to pay for business expenses is unfair. Having them wait to be reimbursed adds insult to injury. This dents morale and talent management suffers. Change needs to happen before the next financial crisis hits. Getting a better expense management system which relieves the financial burden from employees is a good first step in the right direction

About the Author:

Jane-Emma Peerless is Chief Commercial Officer and Director of People at Caxton. She knows how critical business function can be, to keeping staff motivated and performing their roles efficiently. Part of that means our staff should only ever have to spend their hard-earned money on themselves and their families. Follow Jane-Emma on LinkedIn

Is your expense policy up-to-date, fit-for-purpose and understood-by-all? Do you even have one? If the answer to either question is ‘no’, it’s time to take ownership and make it happen. Arrange a chat with us today here