Employees could be left out of pocket to the tune of £40 per night because their firm’s expense policy fails to reflect the true cost of hotel stays, new research has revealed.
According to the Access Expense Report 2019, which includes analysis of tens-of-thousands of hotel claims, staff fork out an average of £130 per night for business trips – well above the £90 limit (£120 in London) many organisations impose.
Dan Mizon, expense management expert at The Access Group, says the figures suggest people are either plugging the shortfall themselves, or else businesses are forking out more than they have budgeted for:
“This discrepancy may simply be down to senior managers being unaware of how much the cost of hotels has risen since their expense policy was launched.
“Capping hotel bills seems like an easy way for companies to save money, but it can be a short-sighted move. When staff are prepared to work away from home, it hardly seems fair to expect them to spend their own money on accommodation. Chances are they will be left feeling resentful about carrying out company business, potentially impacting their performance and even sparking a resignation.
“Companies that simply approve these claims, on the other hand, also risk putting themselves at a financial disadvantage, since costs can soon escalate. This is why, alongside a realistic expenses policy, they need to drill down into their expenses data to pinpoint savings opportunities, for example, negotiating a discounted rate with a specific hotel (or chain).”
The report, based on millions of expense claims, showed that businesses are also losing out because almost half of expenses (48 per cent) are submitted without a VAT receipt.
“This is clearly bad news for companies because it means they are unable to claim back 20% on purchases and also risk submitting inaccurate information to HMRC.
“But there is plenty they can do to get employees on board – from making it easy to submit receipts via a mobile app to explaining how the company could use these additional funds to improve their working lives.”
Other key findings from the report include:
- Expense claims were 40 per cent higher in November (the busiest month) compared to December (the quietest month)
- It takes an average of 40 days from incurring an expense for an employee to claim it back
- 15 of the top 20 highest value expense types in Access Expense are for business travel expenses.
For further commentary on these figures, and to see how your company compares, download your free copy of the Access Expense Report 2019 here.