How manual expenses are hurting your employees

Believe it or not: most companies still manage their expenses as if we were living in the Stone Age.

Manually dealing with all your expenses is bad for business. We even did the math: A company of 10 people will spend £347.10 a month (that’s over £4,000 a year) on just processing what their team buys.

Not to mention, the lack of spending oversight that comes with manual expenses. If you’re sharing a company card around an office, it’s hard to track who bought what, and how much for. 

And this laborious process isn’t just affecting your bottom line, it’s costing your employees too. In our recent survey with Censuswide, we asked 2,000 working people in the UK about their experience with expenses and out-of-pocket. We found that manual expense management is costing nearly £7,500 in expense claims every year, to be exact. That's £51.2 billion in expenses every year.

Your team carries the financial burden 

Among the mountains of paperwork and 3-years’ worth of lost receipts, your employees are likely paying out-of-pocket for work necessities. In most companies, the process of both approving and reimbursing expenses is messy business.

A study by Barclaycard found that workers in the UK lost out on £962 million in 2018 because of misplaced receipts and other unclaimed costs, this works out at £123 per person. 

Out of those surveyed, 48% said they’re still using personal funds to cover business expenses. This, on top of the fact that almost one in ten missed a payment on a personal credit card because of a reimbursement issue, proves that manual expensing leaves everyone at a loss. 

Adding to this, our survey found that 43% of employees having to wait on repayments from their employer has prevented them from paying personal outgoings, such as rent, bills, and groceries. Only 4% of respondents said this happens regularly. 

And they often don’t claim expenses back…

Some employers might argue that it’s the employee’s responsibility to claim back business expenses. Barclaycard’s study even found that the most common reason for employees not filing every expense was because it was “too low to be worth the hassle.”

Manual expenses place almost all of the responsibility on your team, from getting approval to make a purchase to accurately entering all the data to potentially chasing for any late reimbursements. 

While accountability boosts trust within teams, your employees shouldn’t feel like they’re battling with management just to break even.

Your team don’t feel trusted

If your team isn’t paying out-of-pocket, it’s likely they’re tediously sharing one company card and need permission for every purchase, whether that’s a coffee or office equipment. 

Having trust in the workplace is central to a positive work environment, and it boosts productivity. Better still, employees who feel trusted by their manager are 110% more likely to stay in their job than those who don’t, proving it pays to value your team.

While Pleo can’t fix every aspect of your workplace culture, it’s a step in the right direction. The old-fashioned way of handling expenses often leaves people feeling untrusted at work. Ludvig Olsson, the CEO of Trickle told us how Pleo improved their office culture. 

“Previously we only had one payment card [in the company], which left my colleagues with two options – pay out-of-pocket or borrow that card. Borrowing the company credit card feels a bit like asking your parents for money to go to the movies when you were 12.

The team didn’t feel comfortable needing to ask for permission to buy team lunch or the tools that they needed to do their job. Neither did I.”

Your team are distracted from doing their actual work 

Aside from paying out-of-pocket, manually filing expenses costs everyone in your team time too, from the person tediously submitting the expense reports to your Finance team dealing with the paperwork, and the potential fixing of errors. 

A survey by the Global Business Travel Association found that it takes 20 minutes on average to complete a manual expense report. And this is the best-case scenario… 

Like any manual process, there’s room for human error. GBTA also found that 20% of expense reports contain mistakes. And the worst part? It takes an extra 18 minutes to correct every single report, whether it was an expense just for a cup of coffee or a first-class plane ticket. 

In our recent survey, we found that Pleo admins save 11.5 hours on average doing expenses per month, that’s a whole day-and-a-half freed up to focus on the important things at work. 

And they might even feel micromanaged… 

Even the friendliest of bosses could fall victim to making their team feel micromanaged when it comes to handling business expenses. 

As mentioned, the likelihood of making errors on manual expenses is pretty high. Not to mention, GTBA found that it costs $52 on average (approximately £38) to correct each expense report. 

When this happens, there’s a lot of back and forth between the employee and the Finance team. This isn’t just frustrating for Finance, since they’re basically doing the same job twice, but it can make your team feel suffocated, and this expense might have just been a short taxi ride. 

Your team feel friction with management 

Over the years, we’ve heard some horror stories of what work cultures were like before businesses switched to Pleo and scrapped manual expense reports. One story was from Sam Bradley, the Head of Finance at Cookson Adventures, a luxury travel company. 

“I’ve been at companies where everyone’s relaxed with expenses. If they see the CEO catches an Uber, they think it must be fine for them to get an Uber too. Then the policy changes, it tightens up and it’s a real culture shock for employees,” Bradley said.

Forbes also recently listed some reasons behind why some workers “cheat” on their expense reports, one of the most common reasons was down to seeing frivolous spending by management. There’s a sense of unfairness when employees see others in the company taking advantage of company money. But there is a way to solve this… 

We created an Expense Policy Generator that will help you create spending guidelines tailored to your business, with clear spending guidelines for your team, from the Director all the way down.

Then there’s the risk of unintentional fraud…

In the UK, expense fraud costs British businesses around £2bn a year

When you think of ‘fraud’ you might initially think of some undercover masterplan to steal all your company money, in most scenarios though, this isn’t the case. 

It can also be staff not realising something isn’t a valid business spend, or just being opportunistic. It could also just be a harmless mistake that costs you more than it should. Maybe someone from your team inputted an incorrect amount from a receipt, or maybe they accidentally submitted the same receipt twice. 

These kinds of human errors are hard for your Finance team to pick up on. Not to mention, they have more important things to be doing. Sometimes it pays, maybe even £2bn a year, to automate the nitty-gritty work for you. 

Why automation is a win-win situation

We get it, doing business expenses isn’t fun. In fact, Barclaycard's study found that visiting in-laws, ironing and cleaning the house are all activities that workers would rather do than submitting their expenses.

While there are more exciting things to be doing at work than filing expenses, it’s an essential part of every business, and it doesn’t have to be hard work. 

With Pleo, the tedious task of manually filing expenses is automated. Receipts are captured as soon as our company cards are used. Purchases are categorised right away, while admins have a real-time overview of all spending.

Not only does automation mean no one from your team is paying out-of-pocket, it gives you more control of who is spending what, and what for. With a real-time overview of your company spending, you can rest easy knowing everything is being accounted for.