By Matt Clementson, Head of Enterprise UK&I at SAP Concur
The most competitive companies are those that can adapt flexibly to market and social changes – including the developing ways in which businesses are expected to retain staff through employee benefits.
At one point, ‘traditional’ status symbols such as company cars were an easy win when it came to appealing to employees. However, with sustainability and ethical issues coming to the fore against a backdrop of persistent inflation, the choice of which benefits businesses offer to employees has become much more complicated.
The rise of homeworking, incoming regulations, and changing lifestyles have encouraged employees to expect more from their employers. As such, businesses are beginning to diversify their benefits to accommodate this changing environment.
However, a more diverse portfolio of alternative corporate benefits can bring tax and finance challenges. So, businesses will have to be mindful of these changes as they continue to adapt with the times.
Changing demands of employees
Employee expectations surrounding corporate benefits have shifted in several areas, requiring businesses to similarly adapt their processes.
One of the most obvious areas of change has been brought on by the surge in homeworking since the initial Covid-19 restrictions countries faced. Since then, employees have increasingly expected appliances for home offices to be covered by businesses, with workers in some regions even expecting home Wi-Fi to be paid for by their company.
In addition, flexible mobility budgets that can be used for a broad range of transportation modes are gaining traction with employees as a result of changing benefit expectations in countries such as Germany. For private mobility, some businesses are beginning to offer alternative options or compensation in lieu of a company car, with the aim of increasing sustainability across the brand and offer employees benefits that cater to their unique requirements.
Cost saving measures similarly shifted business events from large, company-wide functions into much smaller team-led bonding exercises. In turn, the task of managing these events no longer rests with a single, corporate event organiser but instead with multiple team leads – each with the responsibility of expensing them correctly.
There’s a bigger variety of expenses making their way through systems than previously. As such, there are now more instances of issues such as incorrect categorising and end user errors when it comes to internal cost allocation.
Employees are increasingly making it clear that they don’t want to navigate the complex systems that often cause these expensing errors. Many employees want access to intuitive and easy expense processes. And as a result, there is a stronger emphasis on user experience when it comes to expense management platforms.
In turn, there’s a big shift towards incorporating mobile apps into expense processes. That’s because businesses and employees recognise and appreciate the benefits of using OCR technology to scan receipts and automatically log expenses into the system with little manual work.
Stumbling blocks that need to be taken into account
The risks associated with processing employee benefits in expenses correctly increases, especially as the number of categories and the types of taxable benefits grow. Although these mistakes may be frustrating for finance departments, employees can’t be expected to be tax experts, so processes need to accommodate their expertise. One solution is to reduce the number of overarching expense categories available to employees to file their expenses under.
From an employer perspective it can also be difficult to keep up to date with changing international regulations and understand which rules apply to their ever-growing portfolio of benefits. For these reasons, it can be useful to implement AI solutions that can detect taxable employee benefits through applying the appropriate rules automatically.
Using AI-based tools (to improve back-office productivity) can enable taxable benefits to be categorised and expensed correctly and compliantly all employees need to do is simply upload receipt images.
How companies can react to changes
Expenses were largely handled by finance departments 10-15 years ago, with minimal input from employees beyond them passing on their receipts. Over time, the responsibility has shifted further and further towards employees, which has been hugely beneficial to finance teams’ time.
However, this shift towards individual responsibility has also created much more room for error and greatened the risk of depleting employee experience – a risk that only worsens as employee benefits continue to diversify. So, businesses must implement processes that rely less on employee input and uphold compliancy if they want to adapt. And they must do this without pushing additional responsibilities back onto finance teams.
Solutions like Concur Benefits Assurance by Blue dot can be a useful way forward. The secure, dynamically updated tax compliance platform combines sophisticated ML algorithms and intricate tax knowledge to enable three-way matching between supplier data, evidence, and reports to ensure full compliance.
When it comes to introducing new benefits like flexible mobility budgets for private transportation technology can help manage the taxable implications. Employees as well as employers are always on top of their budget management.
Solutions such as those mentioned above can be a huge support to the finance and HR teams in ensuring compliance by matching data to from receipts and expense items.
Essentially, businesses must be able to offer adaptable processes that enable employees to claim expense easily without sacrificing all-important compliance. If businesses can do this, they’ll be able to continue talent retention efforts, while maintaining visibility over finances including expenses.