How to prepare your expense management for 2021

Coronavirus has challenged businesses all around the world. The pandemic has forced a different reality.

We’re in a time where many things we took for granted, such as the ability to travel to work, and freely leave our homes, has been temporarily taken away from us.

Financial processes such as expense management have changed because coronavirus has forced businesses to shift to remote working.

According to research, more than eight in 10 (84%) of Webexpenses users have found themselves working from home.

Also, 60% of them experienced tech-related challenges throughout this period, while over a third (35%) stated they would be reviewing their departmental processes due to lockdown.

If you are a finance manager, coronavirus will have been a big test.

This unexpected event has forced you to do things differently and perhaps rely on technologies you hadn’t put in place and weren’t particularly familiar.

Yet nothing lasts forever, and our data states that business activities are slowly returning to pre-pandemic levels.

The development of successful vaccines also shows there’s light at the end of a dark tunnel – you need to be ready for an upturn and be in the position to scale up.

Managing travel

Business travel will return but it will be a long time before it hits the same levels that we saw before coronavirus – if ever.

The UK is also no longer part of the European Union (EU), which means visa-free travel as it was is a thing of the past for British citizens.

McKinsey claims the return of businesses and employees to airports and hotels may be in phases. Your business will have to monitor public health and government regulations, health and safety policies, and your employees’ willingness to travel.

It may be domestic and regional travel will return long before international travel does. Instead of using flights, when lockdown restrictions are lifted, your employees might feel safer driving in vehicles as that allows them to reduce whatever risk of coronavirus there will be.

Day to day, many businesses will be hesitant to force employees back to the office, especially if working at home has been successful as lockdown bit down.

You may have already updated your expense policies to handle these challenges.

The hybrid workforce

Day to day, many businesses have changed their policies to deal with the problems caused by the coronavirus pandemic.

Work will never be the same, even if we don’t exactly know what it will be like in the future. For example, Google employees will be kept home until summer 2021, while Twitter announced in May 2020 that it would allow its employees to work from home “forever”.

Stewart Butterfield, CEO and co-founder of chat collaboration software Slack, says your business will be part of a massive and consequential shift and that you may need to give employees new choices about flexibility, conditions and life balance.

According to Slack’s Future Forum research of 4,700 knowledge workers, most employees don’t want to go back to their old ways of working.

Only 12% want full-time office work, while 72% want a hybrid remote model moving forward.

If the future that Butterfield expects comes to pass, your finance department will have long term, flexible working challenges.

If coronavirus hasn’t already forced you to fix any inefficient processes and technology in your business, then a hybrid workplace certainly will.

You can address many remote, flexible, and hybrid working issues with the right business tools and technology. Think about future-proofing employee kit, investing in training and support, and the use of widely available cloud tools.

Your processes need to be ready to handle the increased flexibility of the workforce.

As lockdown restrictions lift, where and how employees work will become more complex, with some returning to the office, some remaining working from home, and some taking the hybrid approach – mixing time between two.

You can choose to leave the arrangements for hybrid working to employees, trusted to fit work around their lives they way they see fit.

But the future could also see you designate certain days for in-office meetings and collaboration, and remote days for the types of work that requires individual focus. Or you could set some weeks for office work and other weeks for working from home.

You also might want to make decisions regarding the need for physical offices.

Your changing expense policies

In terms of handling the hybrid workforce, you may have already amended expense policies in response to the pandemic.

The shift to remote working means employees are more likely to claim expenses on the likes of computer hardware, rather than lunch with clients or customers.

And you may have seen new kinds of spending resulting from coronavirus, which you didn’t necessarily have policies for.

If your business has employees working from home, they can claim tax relief for their job expenses. Under national laws and practices, companies are not obliged to reimburse work from home expenses.

However, in the absence of legislative requirements and government directives requiring you to reimburse workers, you may have considered reimbursing workers for reasonable and necessary home office expenses in incurred in performing the required tasks for you.

These could include some of the expenses incurred in:

• Mobile phone costs
• Internet costs
• PC or tablet costs
• Telecommunication software and hardware.

When drawing up a home working expense policy, you’re more likely to want to exclude home worker expenses such as faster internet connections, additional monitors, printers and ergonomic chairs.

You should ensure that your company policy specifies which expenses will be covered.

Travel policies

Once countries complete successful vaccination programmes, travel may open up again, both domestically and internationally. Here are three tips to help you create and establish a travel policy for your business.

1. Understand the needs of your employees

You may want to conduct an audit, which can help you understand what employees need and like about their travel policies.

You can get the leadership team and different departments all working to a shared goal, so there are not conflicting views.

2. Ensure your employees know what’s going on

Your employees should understand the policies you’re putting in place to help if you make your policy concise, simple and easy to understand.

The policy should match the culture you have in place, minimising travel spend as much as possible without compromising their safety.

3. Match your policy with your technology

To fully execute your travel policy, you’ll need the right tools and technology to increase productivity and compliance while minimising pain and delay.

This means the right expense management software, and building to make booking much more manageable, such as mobile apps.

Increasing visibility and controlling costs

With reduced revenues and continued uncertainties, maintaining tight controls on spending is going to be essential.

Management visibility will be a crucial area – you need data to create key performance indicators (KPIs) and identify spending ‘hot spots’.

Indeed, your finance team needs tools and processes ready to handle this mix, such as real-time data tools essential for effective spending controls, such as expense management software.

Coronavirus has also accelerated the trend of using digital forms of payment – you can pay business expenses using a variety of digital methods.

The need for flexibility and digital management will drive an increased move away from traditional processes and towards cloud-based management.

Your business will need the ability to handle whatever form costs take, and this may have already hastened your digital transformation journey through improving and refreshing your tech stack.

It may be that expense management applications could be an obvious choice.