March 1, 2024

Commute or business travel expense?

Gavin Smith, Director of Element, looks at the implications of remote working in relation to managing travel and expense

Businesses of all sizes are considering their working practices post Covid. Do they re-open their office, continue the working from home practice or a mixture of the two? Whatever happens it seems increasing unlikely that employees returning to the office will be at the same levels we remember pre-pandemic. Corporations such as HSBC and Google have already announced a future three/two plan for their staff– three days in the office, two days working from home – and it’s likely that more companies will work towards similar arrangements.

So, as a business how will these new arrangements affect your T&E processes and as a corporate travel buyer what do you need to do to prepare for the new guidelines?

What are considered permanent and temporary workplaces?

It is important to understand these two terms because travel expenses between an employee’s home and permanent workplace are not allowable, while travel expenses between an employee’s home and temporary workplace may be. The crucial part here is that under current guidelines a workplace will not be “temporary” if you attend it for a period of continuous work lasting more than 24 months. HMRC considers the duties to be performed to a significant extent if the employee spends 40% or more of their time at that place. Post pandemic, we are likely to see more cases of people travelling into the office for team meetings only or to meet a client. HMRC has not yet confirmed its view on whether travel from home to office can be claimed as an expense. However, there is every indication that it will be.  

According to a survey by Gartner, CFOs across the globe have indicated that T&E is one of the most important investments to be reintroduced once revenues return. Organisations are revisiting policies and implementing spend control actions.

So, how do you prepare for this new wave of corporate travel and expense and reclaim the VAT or tax paid by employees on business travel expenses?

You need efficient processes and tools to improve collaboration, ensure compliance of all regulations, and optimise company costs. Policies will likely change from country to country and as staff settle in to this new permanent way of working you will need the flexibility to quickly implement new guidelines on your travel and expense policy with customisable approval workflows. Legacy paper or excel processes will not prevent fraud, control costs, or manage compliance. Although expense software has been in the market for over 15 years, much of that is now clunky to use and exceedingly difficult to configure or update based on new company policies.

Software development is not the barrier to entry that it once was. New software companies have a distinct advantage over legacy software companies. The vast majority (95%) of the expected features and functionality are known, so new platforms like Zoho Catalyst, AWS and MS Azure have made building great software a lot easier.

New software companies have invested equally in the features as well as the user interface, especially configuration of the technology. Most legacy tech configuration has been complied over years, with not much thought about the flow. This has lead to these tools becoming extremely difficult to manage.

The advantage of new software providers is that the configuration flow has had the UI team put in as much investment as they would for the front end. This means many tools are now self-service, from set-up to maintenance. SaaS software has shown that for many clients the software will cover most of their needs. With any technology, there is going to be a compromise, but it all depends on what you can compromise on.

SME businesses need to be looking at how they can move away from Excel and paper-based expense processes. With people not being in an office, it will never be a great employee experience to have to pop down to the post office to send off expenses.

We are seeing expense software companies responding to the new ways of working. They are now providing features and functionality that allow the purchase of non T&E items. As people are not in the office, the stationary cupboard is not something they can use, but it’s vital to make sure T&E is separate from general procurement. Even if they are purchased on the same corporate card, there will be different suppliers and approval for this expenditure. And as software is being used, the finance team have a real time view of that business cost.