With lockdowns continuing worldwide, and the hybrid working model expected to be a mainstay even after the pandemic, continuing home-based work will require a level of trust between businesses and their employees.
However, new research from DiviPay reveals that 50% of SME business owners do not believe their employees are always honest with expenses they incur on behalf of the business.
DiviPay also found that 30% of business owners don't trust their employees with a corporate credit card or expense allowances. This suggests continued remote working arrangements have reduced visibility for many business owners over expenses and corporate credit card use by their employees.
The lack of trust was higher among business owners with only a couple of staff, whose businesses are more financially fragile. Forty-two per cent of businesses with up to three employees don't completely trust employees with their corporate card or expense allowances, compared with 21% of those with 16-50 employees and 23% of those with 51-200 employees.
The smaller the business, the more likely they are to believe that employees are completely honest with their use of company expense allowances. Forty-eight per cent of businesses with up to three employees, 50% of those 3-15 employees, 53% of those with 16-50, and 58% of businesses with 51-200 employees believe their employees don't use company expense allowances honestly.
Divipay also found that 32% of business owners with 16-200 employees compared with 25% of businesses with 3-15 employees and just 2% of businesses with up to three employees had actually caught employees making an expense purchase that was either personal, not approved or not allowed in the business's expense categories.
"It is concerning to see a lack of trust between business owners and their employees," says Daniel Kniaz, co-founder and chief executive of DiviPay.
"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. 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 revealed the bizarre, expensive, unnecessary, or personal purchases employees have made using a company card. Almost a third (30%) of business owners surveyed 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. Other respondents revealed employees had purchased personal trips, gifts, appliances, adult toys and furniture. Some business owners revealed purchases had been accidental, while others admitted employees had made a personal purchase and knowingly claimed it as a business expense, highlighting the potential downside of company cards that don't offer real-time visibility for the business.
"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," says Kniaz.
"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," he says.
"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."