SME owners wary of their employees over expenses

expense management, expenses

A new study reveals that there are many SME owners who would are at least hesitant about the level of trust they have towards their employees when it comes to expenses.

The survey of 326 SME owners, commissioned by virtual corporate card and expense management platform DiviPay, reveals that 50 per cent of SME owners do not believe their employees are always honest with the expenses they incur on behalf of the business, while 30 per cent do not trust their employees with a corporate credit card or expense allowances.

DiviPay noted that such sentiments have come to a head in the wake of the current pandemic, which has brought about remote working arrangements which in turn have reduced visibility for many business owners over expenses and corporate credit card use by their employees.

The report shows that the smaller the business, the more trusting of their employees owners are. It reveals that 45 per cent of businesses with up to three employees, 50 per cent of those with three to 15, 53 per cent of those with 16 to 50, and 58 per cent of businesses with 51-200 employees believe that their employees don’t use company expense allowances honestly.

Divipay also found that 32 per cent of business owners with 16-200 employees, compared with 25 per cent of businesses with three to 15 employees and just two per cent of businesses with up to three employees had actually caught employees making an expense purchase that was either personal, not approved, or not allowed by the business.

“It is concerning to see a lack of trust between business owners and their employees,” Daniel Kniaz, Co-Founder and CEO of DiviPay, said. “It suggests many smaller businesses lack a system that provides them with adequate visibility over expenses and how they’re being used by employees.

“This is what will grow trust within the business,” Kniaz added. “Unfortunately, remote working has likely exacerbated the need for increased visibility over expenses and corporate card use. Without this visibility and trust, business owners are likely spending hours rectifying expenses and risking profit losses.”

The survey also reported on the non-business related purchases employees have made using a company card. 30 per cent of business owners revealed an employee had made such purchases on the company card, with the majority admitting it had been used for personal food or coffee expenses. Some business owners noted that the purchases had been accidental, while others admitted employees had made a personal purchase and knowingly claimed it as a business expense.

DiviPay noted that such transactions highlighted the potential downside of company cards, especially without real-time visibility in place.

“With continued uncertainty around the pandemic and its impact on many businesses, SMEs are sticking to stringent budgets more than ever and small expense mistakes can add up and risk larger issues down the track,” Kniaz said. “It is alarming that some employees are guilty of making personal purchases and allocating them as business expenses. This misuse of funds can lead to liability issues for business owners and land their company in hot water. It points to a need for business owners to strengthen their whole-of-business expense process by including business cards that come with a sophisticated expense management system.”