When T&E meets WFH, how does corporate expense reporting keep up?
The pandemic has caused a massive shift in corporate expenses, turning the company dime upside down as plane tickets give way to home office equipment. It’s a complication for those who track, approve and pay for these expenses, requiring a new approach in the back office.
Since digital payments are reliably available, the biggest change is not disbursement but changing policies to match conditions and tracking receipts. “Miscellaneous” — or an expense that traditionally wasn't a plane, hotel or client meeting — has become the primary payment type. This requires a more detailed calibration of transactions that fit policies and protocols.
“What has to be done is to quickly figure out what goes under miscellaneous,” said Anant Kale, CEO of AppZen, a San Jose, Calif.-based company that uses AI to manage staff spending and has a client base that includes Amazon.
AI allows a faster analysis of receipts to determine what people are buying, at what rate and how that fits into remote work, Kale said, adding his company has boosted its use of AI technology over the past few months.
That allows some of the analysis of reimbursement policy to happen automatically and rely on machine learning, instead of a system in which employees classify their own spending while on the road. In the case of travel, it’s easy for an employer to figure out how a restaurant bill, for example, fits into a corporate policy on what can be expensed.
Office supplies, which can include furniture and personal computing equipment, are harder to track and vet. Part of the problem is these purchases can happen at a big box store and be embedded in personal expenditures.
An analysis of shopping trips, combined with anonymized data AppZen has accrued for its other clients, can help determine what items in a mix are work-related. “If someone is traveling, you can tell if a restaurant bill is related to entertaining guests such as clients,” Kale said. “With home purchases, it’s harder. You may have a computer and groceries on the same receipt.”
The disruption to travel has been considerable. As early as April 2020, U.S. airline capacity declined 70% from April 2019, according to McKinsey. That’s four times greater than after the 9/11 attacks and six times greater than the 2008-2009 crisis. Business travel is 21.4% of travel and hospitality globally, with more than half coming from China and the U.S., according to McKinsey.
At the same time, the number of people working remotely has skyrocketed. In the U.S., the percentage of people working from home at least part of the time at the beginning of 2020 was less than 4%, according to Business2Community, a human resources site. By the end of April, that had grown to 42%, according to Stanford University, adding the remote workforce now accounts for more than 66% of U.S. GDP.
The types of work that have moved remote vary by company and industry, but given Stanford’s findings, there’s a diverse range of workers with disparate needs. The university reports managers, professionals and financial workers who can use computers for work have reported they can work at an efficiency rate of 80% or more. Health care, transportation and business services are still largely on-site work.
“Even small institutions have been able to quit printing expenses and use spreadsheets and email internally,” said Rodney Nelsestuen, a senior analyst at Aite, adding the challenge is figuring out staff versus corporate responsibility. “The reimbursement for WFH costs ranges from none to every cost, including taking over the internet ISP charges for the employee.”
The equipment for remote work and “bring your own device” creates differing expenses that would require policy decisions. Mobile phones and tablets would require upgrades to allow professional use, such as limited access to files, but there is other technology available that could negate that need, thus moving the expense from employee payments to another part of accounting.
“Authorizing employees to use their cellphone may not be necessary for those who have been given laptops, VPNs and [out of band authentication] and are required to use the company assets,” Nelsestuen said. “The cost and support of providing cellphone access to, say, an accounting clerk, would not be worth it since that role would need access via computer to be efficient.”
Rapidly changing expense needs and policies present an opportunity for virtual cards, and more traditional commercial card programs that have office-related procurement cards for maintenance, repair and operation (MRO), according to Steve Murphy, director of the commercial and enterprise payments advisory group at Mercator.
Writing for PaymentsSource, Nvoicepay vice president Kristin Cardinali argues virtual cards can be an alternative for ACH for accounts payable departments for companies that cannot cut physical checks due to remote work.
“There is also an increasing use of virtual cards pushed out to mobile wallets so that even employees without a company-issued commercial card can still make required purchases online or at the point of sale using an e-wallet,” Murphy said.