According to the ONS, the productivity of British workers recently fell at the fastest pace for five years. The figures, published earlier this month, are a damning indictment of our inability to unlock economic growth and raise living standards.
Everyone has a theory as to why the UK lags so far behind our peers. Brexit uncertainty is understandably top of the list, along with a lack of government investment in transport and technology infrastructure.
These are no doubt important but there are other, more mundane, factors at play. Never forget a business is merely a community of people and we humans are often resistant to change; nervous about embracing new technologies. Equally, it’s rarely clear who in the organisation is responsible for finding more efficient ways of doing things, particularly in smaller organisations.
Time is money
Take business expenses, for example.
It’s a shocking statistic that almost a million companies (23% of UK businesses) still manage expenses manually. Our research shows that it takes the accounts team a whole day longer every month to process expenses when receipts are stapled to an expense form.
That’s a day of someone’s time that can’t be spent doing something more strategic. It’s 12 days per year in lost productivity. Now multiply that by a million.
Time, as any company director knows, is money. That extra day spent chasing down lost receipts costs the business almost £3,000 per year, according to our research. That’s £2.8 billion spread across those million UK businesses who still rely on their trusty stapler.
And what about the impact on the rest of the company? Every month, these businesses expect their staff to explain what they spent money on and justify why the company should pay them back.
The people who frequently spend money on the company’s behalf tend to be in client facing roles generating new business. Sales directors, business development execs and general management. Spending time every month hunting around for receipts and filling out forms imposes an unnecessary administrative burden.
And it’s not just productivity that suffers.
Impact on personal finances
Our research reveals that 1 in 3 employees (35%) are forced to pay for business expenses themselves. Adding insult to injury, they must wait, on average, 18 days to be repaid. It takes almost three days longer to reimburse employees when the company uses manual reconciliation.
I’m not saying companies are deliberately using employees’ bank balances as an unauthorised line of credit. But they need to understand the impact of their expense policy on staffs’ personal finances, especially for people on lower salaries.
All this at a time of peak-employment, with fewer people out of work and the best people in high demand. You’d think companies would be doing everything possible to build relationships and foster goodwill. However one in three have experienced cashflow issues as a result of company expenses and just over a third (38%) have suffered stress due to the time it takes to get their money back. Clearly something isn’t working.
The good news is that, thanks to technology, this is all changing, and fast. Three quarters have switched to cloud-based expense management. It reduces the time – and cost – spent submitting, tracking and chasing expenses and, because it syncs seamlessly with other banking and accounting software, minimises the burden of manual reconciliation.
It’s simpler for employees, who use a smartphone app to upload purchase details to the cloud. No need to stuff a wallet full of receipts and try to make sense of them weeks later. It’s much better for financial controllers too, offering real time visibility of who’s spending what, where and on whom.
So which are the companies failing to embrace modern reporting? It’s not a question of location: companies outside the capital (77%) are just as likely to have made the switch as those in London (79%).
It is, however, a matter of size. Only a third (38%) of companies with 50-99 employees are using an automated system as opposed to 9 out 10 of the largest companies in our research.
We understand that change is hard, especially for small businesses. But for the good of both the company and its staff – and perhaps even the country itself – automated expense management must be embraced to help boost productivity.
Jane-Emma Peerless is Chief Commercial Officer at Caxton – a business management platform that provides corporate cards and tracks real-time spending for easy expense reconciliation.