Hotels, air travel, restaurants – an essential part of everyday business for many companies, large and small, but when it comes down to cost is it the company or employee who is in control? According to a recent study by American Express, while companies are stepping up their vigilance in expense control, employees are still more likely to want to step out in style when they know it’s on the company.
“Firms around the world have stepped up their vigilance over wasteful and maverick spending, but there is still a tug of war going on with employees who are making buying decisions’, said Paul Abbott, Head of Corporate Card UK, American Express. “In response, we’ve seen clients’ significantly expand use of the Corporate Cards to manage expense and drive compliance.”
Expense scrutiny increases
According to the survey, companies are watching employees’ spending more intently on both sides of the Atlantic. Corporate scrutiny increased by 48 percent in Europe and 65 percent in the U.S., compared with a year ago, but 73 percent in Europe said they still believed it was “very” or “fairly” common for employees to spend “more freely” on business expenses, such as travel, telephone, meals, tips, and office supplies when they know their companies are paying for it.
“Companies today are aware they need to add extra muscle to their expense control methods but many firms, large and small, are still missing out on ensuring policy compliance through a Corporate Card programme, allowing employees to ‘free’ spend”, commented Abbott. ‘Having a dedicated Corporate Card programme not only works for the company but also for employees, who are often concerned about being out of pocket due to business expenses.’
Other findings from the report include:
• Europe’s young out of pocket – 91 percent of European respondents aged 24 and under stated that they are particularly troubled by having to pay for business expenses before being reimbursed. This was particularly burdensome in France (90 percent), followed by Germany (85 percent) then the UK (78 percent).
• Missing the points – 37 percent of European individuals with company credit cards are not earning any points, rewards or miles. This was highest in France (51 percent), followed by the UK (29 percent) then Germany (32 percent).
• Managing the work / life finance balance – The survey showed that the UK (38 percent) and Germany (29percent) are united in their primary reason (other than company policy) for using a company card; keeping personal finances separate from work, while the French are influenced by convenience/safety aspects and getting corporate discounts (17 percent). These top reasons came above helping with expense reports and corporate discounts for purchases.
Reward programs influence buying
Elsewhere in the surveys, a majority of respondents indicated that loyalty rewards programs, such as frequent flyer, customer loyalty, credit card or hotel rewards, significantly influence their decisions for business-related purchases.
59 percent of those queried in Europe and nearly three-quarters (73 percent) of all respondents polled from America said such programs are “very” or “somewhat” influential on their corporate buying decisions.
“Reward programs have long been a strong influencer for employees and it is great news for firms that reward employees who follow the rules and use their corporate cards appropriately,” added Abbott.
The surveys also pointed to the appeal of corporate card programmes that include reward programmes. For example, in both Europe and the U.S., more than four in 10 of those who use a corporate card (for at least some of their business purchases) said that they are getting more corporate card benefits, including reward programmes, travel insurance and other perks, than they are via their personal cards.
Mr Abbott Added : “More companies today, especially firms that need to reduce costs, are choosing loyalty plans that offer cash rebates at the company level – rather than points to individual employees. The benefits are there to be seen, not just for the bottom-line but for supporting and encouraging employee expense compliance.”
The American Express 2006 Card Check-Up Surveys, Poll of More Than 800 Users of Personal and Corporate Cards in Europe (including UK, France and Germany) and US revealed:
• Nearly half in Europe and 65 percent in America say firms scrutinize employee expenses more thoroughly than a year ago
• 80 percent of European employees and 73 percent in the U.S. are inclined to spend more freely when businesses are paying the bills
• Europeans between the ages of 19-24 are the most concerned with being out of pocket because of business expenses
• Reward Programmes Sway Employee Spending on Both Sides of the Atlantic
