Mobile expense apps need to do more than save an executive time, they need to streamline global tax and expenses rules to save admin staff time as well.
Mobile apps that can capture travel and entertainment business expenses save executives from searching through a wallet to make sense of faded, crumpled receipts.
The problem is, these apps can often make more work back at the head office.
To be truly useful, a mobile expense app needs to both save an executive time and help streamline a company’s global expense management effort.
Managing expenses can be complicated
For businesses with multiple offices around the globe, who send out executives to many countries, this can be far more complicated than it might at first appear, according to Pieter Geeraerts, CEO, MobileXpense.
“Global companies need a system that is set up in accordance with the tax laws where they send people to do business, as well as the countries where they have offices,” he says.
“Every country will have different rules about VAT and what is permissible as an expense. Rules on claiming back tax will vary depending on where the executive is based, where they were doing business and whether the company has a base in the country they were visiting.
“It’s very complex and, additionally, we need to factor in that every company has different rules about what each person can claim back and what counts as personal expenditure.”
Claiming back VAT
This is why, Geeraerts explains, many companies do not claim back the VAT they are owed, meaning the MobileXpense platform typically pays for itself in terms of tax rebates that would otherwise be unclaimed.
It works through the system being set up to allow executives to photograph a receipt which the system then matches up with a credit card bill so currency exchange fees can be factored in.
It can also establish what VAT was charged, or local equivalent, providing the data a business needs, where possible, to claim it back through the correct company office in the proper tax jurisdiction.
Cutting down on admin
A crucial part of mobile expense systems is they often still need administrative oversight. While more than half of companies still stick with paper-based expense procedures, most of those who have apps in place still manually check claims.
With a sophisticated system that knows the company’s rules and each country’s regulations, this can be cut back so those flagged as needing investigation are prioritised.
“We offer a manual checking service ourselves but for companies who rely purely on the digital platform we can help greatly by flagging up expense claims that don’t match their rules so they can decide if action is needed,” he says.
“It saves so much time for a company to know which transactions need to be looked at, and if employees know there is a robust system in place they are less likely to file expense claims that will raise a red flag.
“Our system can also apply the company’s rules so not everything in a claim might be reimbursed. A company may have a policy of paying for a hotel bill to a certain level per night and only paying so much per day on the mini bar, for example.
“Anything above these amounts would be automatically spotted and not reimbursed, but rather treated as a personal expense.”
Fairer deal for execs
On the other hand, the system can help employees by ensuring that expenses are handled properly so they do not inadvertently end up as a part of their salary that is taxed.
This can happen if a company’s expense management system is not properly set up in accordance to the business’s rules and applicable tax regulation and can obviously be annoying for employees. Instead of being reimbursed, they can be left out of pocket.
Such issues caused by the complications of travel and entertainment expense procedures could soon be brought into sharp focus via Brexit.
Companies will find they have a renewed need for a sophisticated platform to cope with new sets of rules applying to British employees on work trips in the EU, and vice versa.