The Future of Staff Expenses Technology
With new technologies, growing interest across the board in data and analytics and increased levels of data sharing, the way we claim and process staff expenses is continuing to evolve and improve.
The opportunities and benefits for companies to move towards digital expenses are well documented and clear, from increased VAT reclaim from HMRC through to improved efficiency and productivity of both employees and payroll teams. We conducted a survey of staff expenses and our findings revealed that only 40% of 102 respondents used an electronic system for submitting receipts.
It’s a fact our own experience backs up – we still see many organisations still either using entirely paper-based processes or Excel spreadsheets as makeshift claims forms. Yet 68% of the respondents in our survey claimed expenses from their employers. So we know that there is still a lot of work to be done to help people move away from paper and capitalise on the benefits that established expenses technology can bring.
What is interesting about expenses, from our point of view, is that whilst digital expenses are using technology to bring about cost savings and efficiencies, it’s not the IT teams who are buying or procuring the systems. Invariably it’s the payroll or finance teams. So what does this mean from a technology standpoint?
From talking with our customers, the payroll and finance teams, it’s not actually the technology that’s important to them, it’s what the technology enables. So everything we do for our customer must deliver new or improved benefits over their previous systems (whether paper-based or digital).
So what can we expect to see in the future of expenses? There are three key developments that will deliver a better expenses experience – technology, integration with third parties, and data.
Technology and expenses
The technology behind translating documents automatically is commonly called Optical Character Recognition (OCR), which provides a very real opportunity for organisations claiming expenses and expenses providers.
OCR can provide the organisation with a smoother claims process. Where employees provide paper receipts or digital photos of them, OCR technology can scan the receipt, read the important and required details and pre-populate these details in an expenses system.
That’s a technology that already exists in many different guises, including smartwatches and will likely provide new and easier ways to process claims in the future. This leads nicely into talking about the growing popularity of wearable technology. Gartner’s Angela McIntyre predicts that smartwatch adoption will see 48 per cent growth from 2015 through to 2017, largely due to Apple popularising wearables as a lifestyle trend.
Once again, the opportunity to develop specific expenses related apps for smart devices provides users with a seamless, integrated claims process; just as the smartphone allowed the logging and tracking of travel claims through the use of GPS. As smartwatches proliferate, the recording of travel would be as simple as a tap on the watch.
However, in the nearer future, the smartphone is still king. Smartphones are everywhere and, in reality, our customers aren’t likely to be using smart watches or other wearables en masse, so the focus must remain on mobile. GPS functionality is already widely used by expenses providers, and the ability for claimants to log and submit all of their expenses on a smartphone is deployed by some.
Another real area of promise with staff expenses is around the integration of different providers and services that can help link to compliance, duty of care, or simple payment of an expense. An excellent example to share is the great work DVLA has done to allow third-party organisations to connect to its databases.
We’re not talking about car dealerships or insurance providers connecting to the DVLA to use the database as a marketing tool, we’re talking real world applications where details such as driving licence category, penalty points and other factors are required.
Nowhere is this more fitting than with expenses, where an employer has a duty of care to all employees making work-related car journeys (excluding commuting to/from a single place of work). Employers must ensure that all company drivers are fit and safe to be on the road, and this includes making checks on their eligibility to drive. If you fail to check and, your employee is involved in an accident, you, as an employer, could be in serious trouble for failing in your duty of care.
We expect that other organisations will begin to follow DVLA’s example such as insurance providers, which would provide that extra level of duty of care for employers.
But, I think some of the most fascinating and promising integrations will be around payment apps such as Apple Pay or Android Pay. Imagine buying a coffee and the payment app automatically creates a new expense item.
Even more so though, is that there can be - and should be - tighter integration with any organisation that send out invoices. A constant work traveller will have invoices, bills, and receipts piling up on email, paper and elsewhere, so to be able to automatically take these and populate an expenses system with them could save a huge amount of admin work.
The future for many industries involves data and analysis – whilst there are many different and specific definitions of data analytics, for the purposes of this article we’ll keep it simple and focused on the analysis of existing data.
I’d argue that the technology and integration pieces are really more of a concern to the expenses provider than directly to a business. However, there are some real and tangible opportunities for organisations just around the corner with the use of expenses data.
There are numerous organisations both public and private, which are already capitalising on the data from expense claims. With six months’ worth of data, you can start to identify common expense claims and put in steps to reduce the need for claims. A great example of this was a hospital we worked with, that was paying for two shuttle buses to take staff between two separate sites. The hospital was surprised to see that there were still numerous expense claims of employees taking their cars for the same journey as the shuttle bus.
Using that data, they were able to work with the employees to understand why – the frequency of the shuttle buses was the issue. With the problem remedied they saw an almost overnight reduction in the number of those claims, bringing the overall cost of claims right down.
But, I believe, that’s just the beginning and there are many other opportunities for businesses to use their expenses data to identify cost savings. Looking at travel, for example, you could use the data from past expense claims to develop partnerships with hotels or hire car providers – that is to say, you can predict your employees continued use of hotels and hire cars and so develop discounted rates with specific chains.
It’s also important to recognise that the power of expenses data does already help, with many organisations using data to help prevent fraudulent expenses claims. Whilst certainly not common practice, there is always the risk that an employee will try to take advantage of the expenses process.
Analysing the top 10 spenders or claimants, for example, can help to identify any anomalies in expenses claims, as can analysing data from employees at similar levels. Is one employee claiming significantly more than their peers? Having the data there to interrogate can help prevent fraudulent claims from happening in the first place, and identify any that may have happened.
Those are just three examples of the way you can use expenses data to bring about savings to your business, but there are many more besides.
But where does that leave us today? Without doubt it’s been the advent of cloud technology that has enabled the revolutionary change to how organisations can record, store and pay staff expenses. The Software as a Service (SaaS) model allows for organisations to leave the technology worries to the expenses provider – there’s no need for cloud hosting or storage and any software updates are managed by the provider.
In reality, the future of expenses is, and does, rely on cloud technology so changes and revolutions in the cloud technology market will open up new opportunities for improved expenses processes.
Those that have already made the move to digital expenses, there should be an expectation that your provider does more than deliver the bare minimum (unless that’s the service you’re after of course), but instead have an expenses provider that will look to make consistent updates and improvements to its technology. Whether that’s the introduction of mobile-only claims or updates to its software, through to helping you navigate and understand your expenses data.