Most businesses recognise the benefits of conferences, events and dinners as a way to drive growth and engagement. In fact, corporate travel spend is set to exceed pre-pandemic levels this year as companies place renewed importance on quality time with clients, partners and teams.
But for employees, work obligations can be a costly expense. Especially when firms remain reluctant to foot the bill, at least in the short-term.
Employees are often forced to act as a bank for their employer, using their own money to pay for work-related costs due to slow reimbursement. Some experts are referring to this practice as ‘the invisible bank’.
The average employee spends £4,255 annually on business-related costs, according to recent findings by Airwallex, a payments platform for businesses.
A survey of 2,000 UK employees found that nearly one-third of high earners (those earning over £100,000) reported annual expenses exceeding £20,000. Londoners are the most likely to front these costs: 68% said they routinely pay out of pocket, compared to just 24% in the South West.
Reimbursement is often slow or lacking any kind of formal procedure. Only 30% of those surveyed were typically paid back within one working week, although nearly 40% believe this should be the standard. Meanwhile, more than a quarter of lower-income earners (those earning £10k–£20k annually) reported waiting over a month for reimbursement.
The dangers of the invisible bank
Unsurprisingly, this practice is financially straining for many workers and is a growing source of tension between employers and their staff.
Being an unwilling financier can be hugely demotivating and frustrating. Some employees encounter financial difficulty while waiting for expenses to be reimbursed. A study by Conferma, a UK-based fintech, found that two in five employees have been stressed due to the time it takes to get re-paid. A further 30% said they have had personal cash-flow issues due to their employer’s slow reimbursement.
Relying on staff to fork out their own money to cover business costs also introduces serious compliance risks for businesses. Informal expense practices can lead to poor documentation, fraud or violations of anti-bribery laws, especially if employees choose to cover costs for people not employed by the firm.
The issue can also complicate expense tracking and impact cash-flow forecasting, increasing the possibility of financial errors, audit mistakes and regulatory penalties. Businesses that fail to incorporate a fair reimbursement framework, taking into account employee wellbeing, may find themselves with a disgruntled workforce and a dangerously loose grip on company finances.
Most businesses recognise the benefits of conferences, events and dinners as a way to drive growth and engagement. In fact, corporate travel spend is set to exceed pre-pandemic levels this year as companies place renewed importance on quality time with clients, partners and teams.
But for employees, work obligations can be a costly expense. Especially when firms remain reluctant to foot the bill, at least in the short-term.
Employees are often forced to act as a bank for their employer, using their own money to pay for work-related costs due to slow reimbursement. Some experts are referring to this practice as ‘the invisible bank’.
