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Streamlining the Out-of-Pocket Reimbursement Process

While companies continue to strive to minimize the frequency of out-of-pocket transactions by their employees, it is very difficult to completely eliminate this type of spending activity.  Practices around out-of-pocket reimbursements to employees can vary significantly between companies, with no single ideal solution that works for all.

Recently, a poll was created using Peeriosity’s iPollingTM technology that looked at how the out-of-pocket reimbursement process worked at a variety of member companies across the world.  The first of two poll questions addressed the frequency at which companies reimburse employee for out-of-pocket expenses.  Looking at the results, while the responses are fairly evenly spread across the entire answer key, weekly reimbursement was the most popular at 28%, closely followed by daily and bi-weekly, both at 20%.  It was interesting to see that one reimbursement frequency did not clearly stand out among the companies participating in this research.

The second poll question then focused on the organization through which employees are reimbursed for out-of-pocket expenses.  Not surprisingly, Accounts Payable continues to be the predominant approach, with 60% of the companies doing so, with Payroll being the second most popular option at 24%.  However, it was interesting to see companies start to use new technology, such as Concur Expense Pay, to reimburse their employees directly from the Corporate Card group.

Some of the member comments related to this poll include the following:

Manufacturing Member: Concur extractions are semi-monthly, on the 6th and 21st. Personal expenses represent 5% of total charges and Concur is managed via P2P’s Global Travel Team. The extraction feed is provided to Payroll, for reimbursement via regular payroll checks. If an employee has personal charges on their corporate liable credit card, those identified items are paid via any personal funds due. If there are not enough personal funds due, then the balance owed is displayed and the individual is responsible for direct payment back to the card. We are exploring the possibility of paying personal charges on the corporate card via Payroll, however many state laws requires the individual to approve each action.

Computers & Electronics Member: Employee payments are either processed through Concur or directly through AP (in locations where Concur is not yet implemented).

Manufacturing Member: Our reimbursements differ by market and ERP system. In the US and Canada, we reimburse via payroll bi-weekly. In all other world markets, the standard is to reimburse via AP, in which weekly check runs occur and employees would be reimbursed on the AP payment schedule. An exception to this is Sweden, where certain T&E transactions are seen as benefits to the employees and must be taxable as income so these transactions first flow through Payroll for the proper taxation to occur and the remaining transactions then pass to AP.

Computers & Electronics Member: We pay employees 2x/week, through our expense provider in most countries.

Manufacturing Member: Out of pocket expenses are reimbursed through Concur, with a direct deposit to a personal bank account.

Wholesale & Distribution Member: Payments are made weekly, but employees are advised to consolidate expenses and submit only one expense report per month.

Manufacturing Member: We actually have two systems for paying employees. Ours is weekly, the other is daily and also out of A/P.

Retail Member: Out-of-pocket expenses are reimbursed through our bi-weekly payroll. We do utilize a petty cash box for expenses less than $35.

Manufacturing Member: We use Concur Expense Pay.

Consumer Products & Services Member: The frequency of reimbursement varies around the world since we have multiple instances of SAP and Oracle.

Manufacturing Member: We just changed from reimbursing employees daily through direct deposit to adding the money to their semi-monthly payroll. Since most expenses are on the corporate card paid directly to the provider, out-of-pocket is usually minimal. This is our practice in the U.S. only. Outside the U.S. most employee payments are made via AP vendor accounts.

Consumer Products & Services Member: Out-of-pocket expenses are discouraged (roughly 3% of T&E spend). They are reimbursed through Concur, with a direct deposit to the individual’s personal bank account.

How significant of an issue is out-of-pocket reimbursements at your company?  Is there an opportunity to streamline this often cumbersome process?

Who are your peers and how are you collaborating with them?

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 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.

 



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