Delayed reimbursements costing UK staff up to GBP £20,000

A new study has highlighted significant financial strain on UK employees caused by delayed reimbursements for business-related expenses.

The research, commissioned by Airwallex and surveying 2,000 UK employees, revealed that a substantial proportion of workers across the country are using their own money to cover upfront business costs, resulting in various financial challenges.

According to the study, 45% of employees reported paying out of pocket for work-related expenses, while nearly a quarter (24%) incur these costs at least once each month. The issue is most prominent in London, where 68% of surveyed workers said they are expected to pay upfront for business expenses before being reimbursed.

The average amount spent annually by UK employees on business costs stands at GBP £4,255. High earners, defined as those receiving over £100,000 per year, face even steeper outlays, with some spending up to £20,000 annually on work expenses, which equates to around 20% of their income. Despite their higher salaries, 44% of high earners reported covering costs upfront for client entertainment and meetings.

"50% of employees earning £100k or more said they experienced financial difficulty while waiting for reimbursement, underscoring that even high earners are not immune to the burden of delayed reimbursements," the study found.

For employees in lower-income brackets, upfront business costs cause additional difficulty. Among workers earning under GBP £30,000, 45% reported borrowing money from family and friends to pay for business-related expenses. The average employee in this bracket spends a particularly high proportion of their annual salary on such costs, according to the survey.

The study further identified several key challenges related to delayed reimbursements. While 39% of employees expect repayment within one week, only 30% receive the funds within that timeframe. This leaves a significant portion of the workforce with personal funds depleted for extended periods.

Evidencing the scale of the issue, 43% of those surveyed reported experiencing financial hardship due to overdue reimbursements, with younger workers (aged 18-34) facing the highest levels of difficulty.

Reliance on credit cards to bridge the gap between outlay and reimbursement is also widespread, with 41% stating they have used credit to cover work expenses. This reliance increases exposure to debt and interest charges when reimbursement is delayed.

The financial pressure of covering work expenses personally has had a tangible effect on workforce engagement. According to the data, 12% of employees admitted to missing company events to avoid paying out of pocket, while 13% of respondents aged 18-34 reported leaving their jobs due to the financial burden of covering business costs in advance.

The dissatisfaction with reimbursement processes is not limited to those on lower salaries. The survey found that 75% of high earners would prefer improved expense reimbursement software, indicating a widespread appetite for enhanced systems across all salary bands.

Across the sample, more than half (50%) of employees called for a better system for handling reimbursements, and 37% said their current expense management software was inadequate.

Airwallex pointed to several ways its corporate cards and services could address these challenges. The company stated that its virtual and physical corporate cards could eliminate the need for employees to pay for business expenses upfront, potentially reducing financial stress for workers and simplifying employers' administrative processes.

"Airwallex enables quick reimbursements, reducing financial stress and saving businesses time on financial administration," a company statement outlined. "Integration with accounting software like Xero, QuickBooks, and Netsuite simplifies tracking, approval, and reconciliation of expenses."

Furthermore, Airwallex explained that businesses using their system can set spending limits and monitor expenses in real-time, ensuring transparency and control over company finances. Multi-currency corporate card functionality is also emphasised, allowing employees to purchase in local currencies without incurring additional foreign exchange costs.