Britain Lagging Behind Europe When It Comes to Expenses
- Personal Finance
- 20.01.2021 12:58 pm
A third of UK businesses expect employees to cover business expenses with their personal finances, according to new research from fintech scale-up Pleo.
The results are based on a YouGov survey of 3000 business professionals across Europe - including 1024 in the UK - that reveal how legacy expense processes are impacting employees’ working lives.
Business expense management is a crucial part of a business’ operations, particularly when it comes to spending overview. Despite this, Pleo’s recent survey reveals a large number of UK businesses are lagging behind other European countries when it comes to managing expenses, leading to a lack of transparency and drain on their operational resources. Most significantly, the survey exposes the toll these processes have on a business' employees - from financial stress, to the lack of company trust in them.
Key findings from the survey include:
Employees paying out of pocket: the most common form of payment for business expenses in the UK was employee finances (32%) rising to 38% for businesses with 1000+ employees. This contrasts with countries such as Germany, where employee finances make up just 7% of business expenses. With the FCA recently finding that 12 million UK adults have low financial resilience, this is even more concerning as late reimbursements could have significant implications for many UK employees.
Expenses cause stress: nearly a third (30%) of people surveyed reported having experienced financial loss or stress due to their expense processes.
Employees aren't trusted: only 22% of UK businesses said they would trust their employees with a company credit card with a set limit, with 17% saying they would only trust senior employees without a set limit, signifying a lack of trust in UK businesses when it comes to company spending. In most organisations surveyed across Europe, less than 10% of employees had access to a company credit card.
A reluctance to adapt: despite 40% of UK businesses wanting greater transparency when managing their expenses, just 33% are willing to change their current processes, with only 18% having digital processes in place - suggesting a reluctance to digitise. This also contrasts to countries such as Spain where 30% of businesses reported their expenses are completely digitised.
Jeppe Rindom, CEO & Co-founder at Pleo, says: “Pleo’s survey reveals the difficult state of expense management we are facing today. It’s concerning that employees are still expected to pay with their own money for business purchases, but it is also surprising the amount of innovation that is still required in this space.”
“At Pleo, we believe it’s crucial for companies to empower employees when it comes to expenses, and that automation pays a crucial role in achieving this. By giving your employees the tools they need to do their jobs, such as Pleo’s smart credit cards and expense solution, businesses can instill trust into their workforce while ensuring complete transparency of their business spend - something that has also become increasingly important during the Covid-19 pandemic.”
Dr. Sankalp Chaturvedi, Associate Professor, Organisational Behavior & Leadership, Imperial College London, comments: “Across Europe, it is interesting to note that (on the same matrix) different countries are acting differently in regards to expense management and some of them are significant differences.
It seems that there might be multiple mechanisms at play, causing employees to pay out of their own pockets and causing them undue stress. This needs to be investigated further.
It is also interesting to note that while UK policies are requiring organisations to support mental wellbeing, only 18% have invested in appropriate platforms to manage expenses which is an opportunity to explore. This would suggest that organisations do not currently trust the technological platforms to be trustworthy. It seems there is an opportunity for organisations to adapt and find ways to reduce workload which is one of the biggest sources of stress at the workplace, and as an outcome improve the mental health of their employees.”