Hybrid Working Has Landed, But What Does That Mean for Expenses?

The COVID-19 outbreak had an enormous impact on business, and it's safe to say the ongoing implications of the pandemic will continue to be felt around the world for many years.

One of the clearest early effects of the crisis was a sudden increase in remote working, as the risks of large numbers of people gathering in enclosed spaces became increasingly clear.

Businesses are now looking to the future and coming up with strategies to succeed in a world forever changed by COVID-19. There’ll be many challenges to overcome in this new environment, including the question of how to manage expenses when you have staff variously based in the office, at home, or a combination of the two.

A hybrid future

There are benefits and drawbacks to both on-site and remote working. Employees trying to maintain a good work/life balance might not want to spend all their hours in the office - especially after the pandemic showed remote operations to be feasible for so many businesses - while being permanently based at home also has its disadvantages, such as workers not being able to personally connect and collaborate with their colleagues.

In light of this, a hybrid arrangement combining some days in the workplace and some at home will make sense for many businesses and workers.

Research by McKinsey has shown the majority of executives expect employees to be on-site one to four days per week, as long as it isn't essential for the individual to be physically present to do their job.

According to Gartner, three-quarters (75%) of hybrid or remote knowledge workers say their expectations for flexible working arrangements have risen in the wake of the pandemic. Four out of ten survey respondents said they would be more likely to leave their role if their employer insisted on a full return to in-person, office-based work.

The implications for expenses

A combination of on-site and remote working could prove highly beneficial for employers and staff alike, but it could also create new questions for you to answer. One priority for the finance department should be to make sure your expenses policy reflects recent changes in how people do their jobs.

Is your expenses policy clear?

It's important to revisit your expenses policy to ensure you're taking a clear and fair position on subjects like what employees are permitted to claim as expenses if they're spending a lot of time working at home.

If people need particular equipment or software to do their job effectively, for example, their employer should cover that cost. However, employees shouldn't expect to be reimbursed for expenses they would have incurred regardless of where they work, such as their monthly broadband subscription.

You should also clarify the details around ownership of items that are purchased for people to use in the course of their work. Does an employee laptop belong to the individual using it, for example, or do you consider it company property?

The wording of your policies relating to issues like these needs to be clear and unequivocal, so there's no ambiguity and minimal risk of confusion or disputes.

Employee travel costs

Travel costs are a common expense for workers whose jobs require them to visit various locations. However, this can become complicated when people split their time between home and the office.

One key question you need to answer is about individual employees' main place of work. If someone spends the majority of their time working at home but is occasionally required to visit the office, these trips could be considered one-off, tax-deductible expenses.

However, if some of your people are predominantly based on-site but have the option to sometimes work from home as a perk, the business shouldn't have to cover the cost of their regular commute.

Again, it's important to have clear policies on the nature of certain roles, where they require employees to be based and the company's position on permanent and temporary workplaces to avoid confusion.

Make sure you have the right tools

Ensuring you have the right technologies and solutions in place to facilitate expenses management is likely to prove crucial as you make the transition to hybrid working arrangements.

A cloud-based platform with real-time tracking, for instance, will help you maintain visibility over expenses and employee claims at all times, regardless of where they're based.

Specialist software can also make employees' lives easier, providing options such as scanning and submitting receipts from home, so people don't have to arrange postage or make a trip into the office to make a claim.

Like many areas of business in the 21st century, expenses management becomes much easier when you make the most of technology.

Further reading:

• Budget Forecasting: 4 Techniques You Could Be Using
• How to Perfect the Art of Cash Flow Forecasting
• Let Your Finance Team Flourish: 5 Benefits of Accounts Payable Automation