Employees are lending their employers over $1.6 billion by footing the bill for reimbursable expenses every month. That’s according to research from Conferma, a leading virtual payment provider, which has identified that 38% of employees in the U.S. use their own money to pay for work-related expenses at least once per month. The average individual expense claim is $110.90.
- 38% of people pay for expenses using personal means at least once per month
- 2-in-5 have experienced cashflow issues due to slow expense reimbursement
- 42% are stressed about the time it takes to get their expenses repaid
- Younger employees are more likely to feel stressed as a result of delayed reimbursement
Employees that must pay for their expenses and then accept a reimbursement weeks later have feelings that they are at times acting as a bank to their own employer. The problem of a slow reimbursement process is a big issue for many employees. In fact, 45% of people with business expenses experience personal cash flow issues because of their company’s sluggish expense repayment process.
Cash shortfall takes its toll on employee mental health
With over a third of employees stating they had to wait up to or over 2 weeks to be paid back after submitting a claim, it’s unsurprising that cashflow issues occur regularly. The majority of employees, from 18 to 34 years old, said they had less money to spend on personal items in the short-term, correlating with the fact that the average cost of work related expenses was highest among this age group with an average monthly total of $116.30.
This is undoubtedly taking effect on employee mental wellbeing. Over half of employees in this age range admitted that the combination of these factors caused them stress because of the accounting system.
A detrimental impact on employer productivity
This is an issue from the employer’s perspective, too! Forty-nine percent of employees admitting they would stop spending money on a business expense if they had to wait a significant amount of time to be repaid. This could have a detrimental business impact due to business opportunities lost. For example, over 20% of employees said they would stop undertaking business travel and a shocking 51% prepared to halt meeting current or prospective customers and undertaking business development activities altogether.
Simon Barker, CEO of Conferma, comments: “The scale of this issue identified in these findings has taken us by surprise. We knew it was a problem, and one we are working hard to address, but the impact of this on both employees but also employers really is cause for concern. It simply should not be the case in today’s world that individuals, particularly the low-paid, are having to hold back personal spending due to the delay in expense repayment. Likewise, it is staggering that a single business opportunity should be missed due to an employee’s decision to hold off marketing because of these inefficiencies. This is a problem that is understandable in 1988 but not 2018. Businesses must do more to address this issue for their own benefit as well as the wellbeing of their own staff.”
The Conferma report titled "America's Invisible Bank: The Real Cost to Employees" is based on an online survey of 1,000 adults employed in the U.S. that was conducted in June 2018.
Find out how virtual payments could help alleviate cashflow problems. Read So What Exactly Are Virtual Payments?