50% of business owners say employees not honest with expenses - and 30% don’t trust them with a business card - TechInvest Magazine Online

With lockdowns continuing in Australia, and the hybrid working model expected to be a mainstay even after the pandemic, continuing home-based work will require a level of trust between businesses and their employees. However, new research reveals that 50 per cent of SME business owners do not believe their employees are always honest with expenses they incur on behalf of the business.

The finding was derived from a survey of an independent panel of 326 SME business owners, commissioned by DiviPay (divipay.com), Australia’s first virtual corporate card and expense management platform. The full survey results, including breakdowns across state and organisation size, can be found here: divipay.com/whitepaper-the-state-of-employee-spending-and-trust-in-small-businesses-2021

DiviPay also found that 30 per cent of business owners don’t trust their employees with a corporate credit card or expense allowances. This suggests continued remote working arrangements have reduced visibility for many business owners over expenses and corporate credit card use by their employees.

The lack of trust was higher among business owners with only a couple of staff, whose businesses are more financially fragile. Forty-two (42) per cent of businesses with up to three employees don’t completely trust employees with their corporate card or expense allowances, compared with 21 per cent of those with 16-50 employees and 23 per cent of those with 51-200 employees.

The smaller the business, the more likely they are to believe that employees are completely honest with their use of company expense allowances. Forty-eight (45) per cent of businesses with up to three employees, 50 per cent of those 3-15 employees, 53 per cent of those with 16-50, and 58 per cent of businesses with 51-200 employees believe their employees don’t use company expense allowances honestly.

Divipay also found that 32 per cent of business owners with 16-200 employees – compared with 25 per cent of businesses with 3-15 employees and just 2 per cent of businesses with up to three employees – had actually caught employees making an expense purchase that was either personal, not approved or not allowed in the business’s expense categories.

Daniel Kniaz, Co-Founder and CEO of DiviPay, says: “It is concerning to see a lack of trust between business owners and their employees. It suggests many smaller businesses lack a system that provides them with adequate visibility over expenses and how they’re being used by employees. This is what will grow trust within the business. Unfortunately, remote working has likely exacerbated the need for increased visibility over expenses and corporate card use. Without this visibility and trust, business owners are likely spending hours rectifying expenses and risking profit losses.”

DiviPay virtual corporate cards are linked with a sophisticated expense management platform, which uses OCR technology to enable employees to automate and streamline receipt capture after every single payment. Business owners are also able to view real-time transaction feeds, which provide a complete view of purchases, including date and time, merchant information and the employee who made the purchase. Business owners can also set purchase limits on cards and restrict the categories and merchants employees can spend with. Systems such as these can give employers peace of mind and renew their trust in employees.

The survey also revealed the bizarre, expensive, unnecessary, or personal purchases employees have made using a company card. Almost a third (30 per cent) of business owners surveyed revealed an employee had made such purchases on the company card, with the majority admitting it had been used for personal food or coffee expenses. Other respondents revealed employees had purchased personal trips, gifts, appliances, adult toys and furniture. Some business owners revealed purchases had been accidental, while others admitted employees had made a personal purchase and knowingly claimed it as a business expense, highlighting the potential downside of company cards that don’t offer real-time visibility for the business.

Daniel adds: “With continued uncertainty around the pandemic and its impact on many businesses, SMEs are sticking to stringent budgets more than ever and small expense mistakes can add up and risk larger issues down the track. It is alarming that some employees are guilty of making personal purchases and allocating them as business expenses. This misuse of funds can lead to liability issues for business owners and land their company in hot water. It points to a need for business owners to strengthen their whole-of-business expense process by including business cards that come with a sophisticated expense management system.”

Below, Daniel shares his tips on how SMEs can improve trust in their employees, particularly when working remotely.

1. Communicate openly and frequently. Without frequent communication, employees may be more likely to be disengaged from their work, cut corners or make oversights in company expenses. Businesses may need to develop new expense rules for the work-from-home environment – some expenses may not be necessary (such as travel), while new types of expenses will (such as phone calls and subscriptions). Organisations could also consider updating their policies while working remotely, including adjusting how employees receive approvals from managers before making a purchase. Guide employees through any new rules, allow them to ask questions, and ensure they are diligent with their record keeping.
2. Reward and recognise employees for their hard work. Remote working, particularly during the current conditions, can be tough and it is easy for employees to become unmotivated. Organisations could consider continuing the recognition programs that were in place prior to lockdown. This could include employee of the month initiatives or rewards or bonuses for those who have gone above and beyond. A simple ‘thank you’ or a small gesture, such as a flower delivery, can also go a long way to keeping employees motivated and their hard work acknowledged
3. Ensure employees have what they need to work productively. It is important for businesses to ensure employees have an ergonomic work-from-home set-up. This can include making sure they have a dedicated space for work that offers a clearer separation between work and home life. Employers should also ensure they have adequate internet access, can access company files and databases remotely and are using appropriate devices. Some companies may need to provide a desktop computer or laptop to employees during the remote working period. When employees have access to the tools and information they require to work effectively, employers will have more peace of mind and trust in them, and vice versa
4. Provide emotional support. While it is important for business leaders to ensure employees are working productively and effectively, remote working can be isolating and some may find it challenging to cope with. A key to establishing trust is ensuring that employees feel supported and that their emotional needs are a priority. Scheduling check-ins is a simple way for leaders to show they’re accessible to employees and ready to provide support and advice when needed. It is important for employers to acknowledge any difficulties and challenges that may be impacting their employees and find ways to address them
5. Adopt a system that provides visibility and transparency over finances. Having a good expense management system in place that gives employers control and visibility over spending, can go a long way to improving trust. It also ensures expenses aren’t mismanaged and employees will be more likely to report expenses honestly. Organisations could consider using an automated expense software where they can supply individual cards to employees, while also setting budget limits on spending.

The full survey results, including breakdowns across state and organisation size, can be found here: divipay.com/whitepaper-the-state-of-employee-spending-and-trust-in-small-businesses-2021