Finance Leaders Urged to End Reimbursements as Employees Feel the Cost-of-living Crunch
- Personal Finance
- 06.03.2023 10:15 am
A new report from Soldo, the leading European expense management platform, unveils the scale of financial hardship UK employees face due to out-of-pocket expenses.
A staggering six in 10 (67%) were found to use their own money for business-related costs at least once a week - with a fifth (20%) saying they put their hand into their pocket daily.
This is resulting in employees taking drastic measures to cover the costs, especially when some are left waiting weeks, if not a month (20%), to be reimbursed. Over half (52%) have used personal credit cards, a fifth (21%) have gone into their bank overdraft, and 19% have resorted to asking for money from their friends or family.
The research shows out-of-pocket expenses are taking their toll on employees’ financial well-being and mental health. A quarter (24%) admit they have less money for groceries and other essentials, 17% are unable to save as much as they'd like, while six in 10 (61%) feel anxious having to cover business spend.
As a result, employees are calling out for businesses to change their expenses process. Six in 10 (62%) say they would like their company to provide cards to all employees to completely eliminate the need for reimbursements. Half (50%) want tools to automatically capture receipts (50%), while 45% stated that low-value expenses should come with less stringent approvals.
Carlo Gualandri, CEO and Founder of Soldo said: “Employees have made it clear they are struggling with the issues brought about by out-of-pocket expenses. They’re asking for less bureaucracy, more transparency, more fairness and convenience - all things that employers can help with by digitalising their expense process.”
“Company cards, where funds are pre-loaded in advance, remove the burden of out-of-pocket expenses. In addition to this, when they are linked with real-time spending dashboards, finance teams have better oversight and control of spending - a win, win in today’s economic climate.”
Rising inflation impacting expenses
And it’s not just those on lower incomes that are feeling the crunch. Employees of varying salaries are affected by rising inflation, which has had a knock-on effect on business-related costs like travel and entertainment.
The research shows even those earning a whopping £100k+ - 200% more than the average UK salary - admit their out-of-pocket expenses have "increased significantly" (60%).
Given the scale of anxiety for high earners, it’s unsurprising that over a third (39%) of respondents earning salaries of £20k to £50k - the medium income bracket - feel very uncomfortable paying for things like business travel.
Large companies are the worst ‘expense offenders’
Soldo’s research shows it’s large companies that are the least likely to make changes to their expense processes. Four in 10 (42%) employees of very large companies (5k+ employees) and a quarter (24%) of companies with 250-499 employees say their employers have made no changes to their expense policy at all.
In addition to this, employees on lower incomes (£12k-£30k) were also more likely to say their employer hasn’t done anything to address the issue (47%) compared to a third (33%) in total.
The full findings are available by downloading the report, Cost of business crisis: Why now's the time to rethink expense management.