A report by Emburse has revealed that the younger workforce is feeling the pinch when it comes to finances. In a survey which looked at expense processes within UK businesses, it was the age group of 16-34-year-olds who were most likely to prefer using corporate cards to pay for expenses than using their own personal cards. And the majority of these said this was due to the cost of living crisis. Jamie Anderson, Chief Revenue Officer at Emburse, explained why companies should take the time to address this.
Concerns around tight personal finances are putting people off using their own credit cards for work expenses, according to research commissioned by Emburse, a global leader in spend optimisation. The research also showed that companies were slow to respond to the demand, despite an increase in expense fraud related to current economic conditions.
The survey was conducted by Censuswide and looked at expense processes within UK-based businesses. Questions were asked to 1,242 employees about business policy enforcement in relation to spend, and employee preferences around expensing business travel and other related costs.
The data show that 16-34-year-olds were most likely to prefer corporate cards over personal cards, at 55% of respondents – the largest of any age group. Of these, 47% cited the cost of living crisis as the key factor. This comes at a time when 78% of 16-24-year-olds reported cost of living increases, up from 42% in January/February 2022.
However, the survey revealed just 6% of employees at mid-size and larger (500+ employees) companies are required to use corporate cards. With companies experiencing soaring cases of fraud due to cost of living hikes, the majority of organisations continue to shun corporate cards. This is despite business cards’ ability to minimise the risk of wasteful or fraudulent claims, while offering an effective way to more effectively control and track businesses spend.
Young workers with precarious finances worry about mixing business and personal expenses.
• In general, over half (55%) of employees aged 16-34 would use a corporate card if given the choice, compared to 41% of those over 55
• Ninety-four percent of young employees cite long expense reimbursement processing time, risk of late fees, preference for not mixing personal and business spend and streamlining the expenses process, as the key reasons for wanting a corporate card
• Of those who would prefer to use a corporate card, 40% cited concerns about their own finances
• Exacerbated by the length of time it can take for expenses to be processed incurring the risk of late fees (28%) and low credit limits (12%) were other reasons cited
• Preference for corporate cards also include a dislike for mixing personal and business spend (34%) and ease in managing expenses at the end of a trip (24%)
Jamie Anderson, Chief Revenue Officer at Emburse, said: “Lots of us are feeling the impact of rising prices, but one size doesn’t fit all. Those with a lower income, many of whom are young professionals, are now finding themselves stretching their pay checks even further to cover the rising costs of rent, bills and groceries. Just last year, the London Institute of Banking and Finance discovered a staggering 81% of young people feel anxious about their finances. This age group feels increasingly isolated as they try to decide which trade-offs to make so that ends meet.
“What it means is companies desperately need to listen to their employees and respond accordingly to support them during the current economic squeeze. Given almost half of young workers say that cost of living makes them want a company card to pay for their expenses upfront, demands can’t continue to go unanswered. Not to mention, young workers on lower salaries may not have generous access to credit. So the prospect of asking young people to put through business spend on personal cards shows a lack of empathy.
“On top of this, with 94% of young workers citing long expense reimbursement processes as reason for the change, CFOs need to step it up. Really, it is good business sense to provide corporate cards. Instead of finance teams persevering through heavy batch processing to reconcile expenses at the end of a quarter, cards provide businesses with acute, real-time, deep-spend insights.
“It doesn’t make sense for the finance arm to endure admin-heavy lifting digging through paper-based, back-dated expenses, while employees wait for reimbursement. The numbers speak for themselves: finance teams that now use company cards save between five to 10 hours per month. Freeing up this time for teams is invaluable for business health and the employee experience, allowing CFOs to focus on more important goals such as financial planning and business growth.
“Alongside this, leadership can relax knowing that the financial anxieties felt by younger employees are lifted. It’s a win-win opportunity as an easy – and free – way to show employees across the board that you care, humanising your workforce each penny at a time.”
Business card adoption and requirement remains low across the board
• Despite increasing need for visibility over finances, only one in 10 are required to use corporate cards for business purchases
• Surprisingly, there is less appetite for personal card use for air/hotel points for personal leisure and travel – only 10% of employees cited this as a reason for personal cards
• Currently, only 6% of employees working at large enterprises (500+) are required to use a company card for expenses
• Among small- to mid-size businesses figures remain low for corporate card requirement:
• 10-49: 12%
• 50-99: 9%
• 100-249: 12%
• 250-500: 14%
• Of the 38% of employees that report their company provides corporate cards, medium-sized businesses (100-249) are most likely to, compared to just 25% of 500+ enterprises:
• 10-49: 44%
• 50-99: 45%
• 100-249: 45%
Anderson added: “Giving employees credit cards also makes sound business sense. By setting restrictions on how and when, and where they can be used, it’s much easier to control purchases in advance, instead of having to wait for expense claims to come in after the fact. They also give much easier, accurate and timely insight into corporate spend, and the rebates that come back will also benefit the corporate coffers.”Click below to share this article