The impact of the cost of living crisis on employees claiming expenses

As the cost of living continues to rise in the UK, employees are increasingly feeling the financial strain. 

The ongoing crisis has significant implications for individuals who rely on claiming expenses as a means to alleviate some of their financial burdens.

In this blog post, we will explore the impact of a cost of living crisis on employees who need to claim business expenses.

Increased financial strain

The increased cost of living means higher prices for essential goods and services, such as housing, utilities, transportation, and groceries.

With limited disposable income, employees may struggle to cover these rising costs, making prompt repayment of expense claims even more critical. 

Claiming expenses for work-related costs, such as travel or equipment, can help employees recoup some of their expenses, alleviating the burden on their personal finances.

Unfortunately, the inevitable wait for expense claims to be processed and reimbursed is proving increasingly painful for many employees. 

Greater need for expense claims

The cost of living crisis often forces employees to find ways to stretch their income further.

Claiming expenses becomes a necessity for many individuals to maintain their financial stability.

Employees may rely on expense claims to offset the costs of business-related travel, home office expenses, and other work-related expenditures.

This increased reliance on expense claims underscores their importance as a means to mitigate the impact of rising living costs.

Some sectors, for example hospitality, rely on their employees to shoulder expenses more than others.

And it’s not just employees in lower paid jobs that can feel the pinch.

Increases in the cost of living are also affecting middle and senior management employees, so it’s important for employers to consider creative solutions such as pre-paid cards to enable employees to manage their personal cash flow. 

Increased administrative burden

With a growing number of employees relying on expense claims, there is an increased administrative burden for both employees and employers.

Human resources and finance teams must handle a higher volume of claims, requiring additional time and resources for processing and verification.

This can lead to delays in reimbursements, adding to the financial strain employees may already be experiencing. Companies which implement expense management software find that the time taken to process and reimburse claims can be significantly reduced.    

Importance of supportive policies

In times of a cost of living crisis, companies can play a crucial role in supporting their employees. Implementing supportive policies around expense claims, such as streamlined approval processes, can provide much-needed relief.

Clear communication and transparency about expense policies can also help employees better navigate the claim process and understand what expenses they can legitimately claim.

Companies are also feeling the pinch

It’s not just employees who are feeling the impact of high inflation and rising costs. Firms of all sizes are reeling from increased business costs and are looking to save on time and effort wherever they can.

Expense management can help with this, reducing time spend on processing expense claims and reconciling data. 

In particular, Expend Card Connect allows businesses to immediately see purchases made on any Visa Business Cards that are connected to Expend, and approve them for filing into their company accounts.  

Currently, payments on business credit card balances are managed centrally by a firm’s finance team, costing the company valuable time in processing each expense purchase. Expend’s Card Connect removes this overhead. It also eliminates the risk of errors being introduced through manual data inputting. 

In business, real-time visibility of costs is an important consideration. Expend Card Connect provides all important visibility of costs and zero-touch processing of personal expenses to help answer a pressing customer need. 

In summary, as the cost of living crisis escalates in the UK, employees relying on expense claims face heightened financial pressure. Recognising the impact and implementing supportive measures can help alleviate some of the burdens on employees, ensuring that expense claims serve their intended purpose of providing necessary financial relief in challenging times.

Disclaimer: This is not legal, accounting, or tax advice – it's simply a guide. If you need help, check with your accountant or contact HMRC directly.