Expense reimbursement asks a lot of your employees. They have to spend their money to pay for company purchases, take the time to gather receipts and fill out forms, and then wait until they are approved. Then, they may have to wait even longer for checks to be issued, or the next payroll cycle rolls around to get their money back.
We'll let you in on a secret. Most employees hate this process. While a few like racking up reward points on their personal credit cards, most employees are unhappy with the process when they know there's an easier way to handle expense management.
Why Employees Hate Your Expense Reimbursement Process
- Tedious and Time-Consuming
According to the Global Business Travel Association (GBTA), it takes about 20 minutes on average to complete one expense report. When you consider that companies process hundreds or thousands of expense reimbursement requests annually, that's a lot of downtime that could be used more productively.
Reports are also prone to errors, such as missing receipts or inaccurate information. Nearly 20% of reports contain mistakes, which take even more time to track down and correct — doubling the time spent filling out forms. - Reimbursements Take a Long Time
Employees spend their money but then have to wait to get it back. If everything goes smoothly, getting paid can still take weeks or longer. A typical approval chain routes expense reimbursements to supervisors or department heads, who may or may not handle the approval process swiftly. Then, reports go to accounting teams. Once approved, payments typically wait for a regular check run or paycheck period.
While the average expense report is approved and paid within two weeks, it can take much longer in many companies — especially if issues need to be addressed. - Lost Receipts
Expense reports are generally filled out sometime after a purchase is made, and lost receipts are common. This can cause considerable frustration for employees as they have to justify expenses and spend additional time tracking down bank statements or credit card reports to prove their expenses.
Many companies have policies that limit reimbursement amounts when receipts are lost, meaning employees may pay out of pocket for legitimate company expenses and never get repaid. - Unclear Policies
Many companies have unwritten rules or poorly-defined spending policies. For example, companies may have preferred vendors or discount rates with certain merchants but fail to inform their employees. So, when an employee spends with a different merchant or doesn't leverage discounts, it can cause frustration for both employees and the company. - Puts Personal Credit at Risk
Expense reimbursement can also create significant financial hardship for employees, especially those who are younger. 73% of Millennials and 65% of Gen Z report living paycheck to paycheck, using the bulk of their pay to cover essential bills. They are also more likely to have a higher amount of debt and less available credit.
When you ask employees to also cover company expenses, you are tying up money they may desperately need. While waiting a week or two to get reimbursed may not be a big issue for company executives, younger workers may struggle to pay their bills — especially amid inflationary times. - Outdated Tools and Technology
Today's employees pay bills online, use cashless apps, and text payments to their friends. They are used to streamlined systems that they use every day. When companies don't deploy modern tools, it sends a message that they are not staying current with technology.
Companies often promote that they are technologically advanced, but employees know differently. 93% of executives in a PwC survey said they pay attention to people's needs regarding tech, but only about half of employees say that's true. Nearly a quarter of employees say their company's systems need improvement or are stuck in the past.
Modernizing Your Expense Reimbursement and Spend Management
Torpago offers a better way to handle your company spending. With an end-to-end spend management platform, you can eliminate the friction in the reimbursement process while gaining more granular control over spending.
Torpago enables companies to issue unlimited physical and virtual cards on demand so that employees never have to pay out of pocket. Cards can have pre-set spending limits, be limited to preferred vendors, and handle approvals automatically based on pre-configured thresholds. Torpago can also streamline non-card reimbursements and pay directly to employee bank accounts without waiting.
Accounting teams can monitor spending in real time. There's no more waiting for end-of-the-month credit card statements or pulling reports. Real-time integrations with over 1,000 HRIS, accounting, banking, and productivity platforms also eliminate manual data entry and streamline processes for everybody.
Learn more about how to modernize your spend management and eliminate employees' frustration with your expense reimbursement process. Download our eBook, The Business Reimbursement Model Is Dying Making the Transition from Expensive Reimbursement.
