Why move at all?

Your peer views on expenses

A large number of businesses [50 per cent] are still storing staff receipts in paper format. The problems associated with paper-based receipts include the storage of the paper receipts and associated costs with doing so. Further complications include staff losing receipts or providing torn or damaged copies, as well as providing stacks of paper for many months worth of unclaimed costs that they demand reimbursement for.

Payroll teams are often then left trying to balance the books at the end of the month using reams of staff receipts. The challenge is relative: for smaller organisations that may not have internal payroll support the issue is one of re-allocating time to the task. For those teams that are managing hundreds of expenses claims the challenge is the same, but larger in scale, and will require a dedicated team. Manual checking of paper receipts is not only hugely time consuming, it also means the chances of spotting claim errors or intentional over-claiming are difficult. The challenges here would include processing old or out of date expenses, processing a duplicate claim and paying out by mistake, but most importantly, businesses could be missing out on VAT reclaim opportunities.

There are numerous companies across all industries and sizes in the same, confusing position. If you’re storing and checking staff expenses receipts in paper format, you’re not alone.

50% of finance professionals accept digital receipts, how do you compare?

Governance

One of the key reasons consistently cited by organisations for why they keep paper-based receipts is that they are under the assumption that HMRC requires them to keep the receipts for a minimum of six years. However, a Software Europe and CIPP (Chartered Institute for Payroll Professionals) investigation into HMRC’s paper receipt policy has led to confirmation that UK businesses no longer need to keep hard copy receipts for employee expenses in storage for any reason, provided that electronic copies exist on their financial IT systems.

The basic rule is that a company must create and retain normal business records, but these records do not have to be kept in a set, i.e. hard copy way, which for years is how businesses have been led to believe it must be. Most bookkeeping and computer systems will meet the requirement providing that they contain all the necessary requirements for your invoices to be valid VAT invoices (if applicable). Notwithstanding CH13300, records can be kept electronically, so long as the method of storage is capable of capturing the information accurately.

Moving to the cloud

The tide is turning towards electronic/digital storage of staff expenses, with half of those surveyed by Software Europe and Pay & Benefits saying that they accept both paper and electronic or electronic only formats. With 42 per cent having made the switch in the last 12 months.

As stated previously, HMRC has confirmed that using an electronic expenses system to manage staff receipts for expenses such as mileage and subsistence is now recognised as standard practice. HMRC will not require paper as a back up to electronically stored copies. Electronic is possible and it is allowed.

For those businesses looking to move to electronic or digital receipts, the first step is ensuring you have an expenses policy which supports your business. According to research from Quocirca, around one in four UK companies do not have an expenses policy in place.

How to get there

1. Expenses policy
2. Evaluate electronic expense systems
3. Information gathering
4. Preparing your system
5. Preparing your staff

1. Expenses Policy

An expenses policy provides employees with a high level view of what is expected and specifically guides the employee on what is, and isn’t, an acceptable expense for the company. From the company’s perspective, the policy can save money and improve efficiency – as an example, for mileage, one of the biggest areas of conflict, a policy can explain how and why journeys are routed a specific way [usually the shortest, as opposed to quickest distance between two locations].

Having an expenses policy in place can reduce the number of conflicts between an employee and the company, as well as reducing the overall time spent validating expenses.

Evaluate electronic expenses systems

Before you make the switch, look closely at scanning facilities and services:

• Staff prefer a combination of both PCs with scanners and mobile cameras or applications – 60 per cent of business indicated that staff were using PCs and scanners; 21 per cent indicated staff are actively using mobile phone cameras applications.
• Assess what the new expenses management system will offer you in terms of capturing receipts – 21 per cent of payroll teams are content to see the use of mobile phone cameras, with others stating they had no particular preference.
• Does the expenses provider have a dedicated mobile app? – Linking expenses software to mobile devices (via dedicated apps) means the inclusion of GPS functionalities to help tracking for mileage claim validation.
• Can you outsource part or all of the expenses processing to the expenses provider? – Outsourcing services can help paper-based teams overcome all of the perceived hurdles for changing to digital receipts.

Information gathering

Once you’ve developed your expenses policy and chosen your expenses provider you will need to provide certain information to make sure that the system is configured to your company. Usually this is done through a ‘kick-off’ meeting, which is designed to get you familiar with the system and help you understand what information you will need to provide.

The specific information you’ll need to provide will depend on your expenses policy, but staff names and contact details, home and work address, and details of any cars used for business purposes are common. Having this information already prepared will help speed up the process of moving to cloud-based expenses.

Other information which will be collected includes interface requirements into other systems, approvals and authorisation processes, and any other company particulars such as cost codes, credit / fuel card integration requirements.

Finally, you will need to provide typical expense items themselves. Common expense claims would involve mileage, subsistence and parking to name a few, but again, this is dependent on what you allow your employees to claim for.

Preparing your system

Once you’ve provided the information to populate the expenses systems with staff details and expense line items, your expenses provider should set up the system and make sure its tailored to your requirements. This typically involves a small project team within your company testing the look and feel of the system and to ensure that everything is configured correctly. Have them submit real expenses through the system so they can see how it works [these can be deleted before the system goes live].

Having a dedicated project team using the expenses system before its rolled out across the company can help iron out any issues or problems during the testing phase, meaning a much smoother transition when it comes to the date you open the system to claimants and go live.

Preparing your staff

There’s no right or wrong way of doing this, but there are certain steps you can take to ensure there are no issues. Letting your staff know ahead of time that there will be a new expenses system being implemented and explaining the benefits it will bring to them can go a long way to them accepting the new system.

When rolling out the system, the best approach to take would be to select one or two employees to become ‘advocates’ of the expenses software who can then provide support to the rest of your staff. A good cloud-based expenses solution shouldn’t need any significant investment in staff training for it to be used, so be wary of any expenses providers that recommend this approach. Your expenses software should be intuitive and easy to use, with minimal training needed for staff to use it. How-to guides and video tutorials should be on hand from your provider, as well as helpdesk support.

Getting the right fit

A good expenses management system will offer excellent facilities for receipt capture, but also much more. It can help collect the supporting data you need for accurate reimbursement, help you to reduce expenses costs, speed up the entire process for claimant and payroll teams, as well as increase VAT recovery. It will underpin policy enforcement, and help guide your staff to make the right expenses choices. The expenses provider should be there to walk you through the entire set up and deployment process, and help you tailor the system to meet your company’s individual expenses needs.