Depending on your company's activity, some of your employees may be regularly on the move, incurring expenses on behalf of the company. This situation, which can be complicated to manage, can create tension and even conflict within the company if the management of this system is not optimized.
There are a number of ways to manage your employees' expenses, including the business expense advance method.
Business expenses
Business expenses are expenses incurred by an employee in the course of his or her professional activity and necessary for the proper performance of his or her duties within the company.
The following expenses may be considered business expenses:
- Meal expenses for trips of one day or more that do not allow the employee to take his meal at his usual place of work.
- Travel expenses for business trips, from the employee's usual place of work to the place of work: mileage allowances, tolls, plane and train tickets, car rentals and public transport.
- Lodging expenses for several days' travel more than 50 kilometers from the employee's home or more than 1.5 hours by public transport.
- Telecommuting expenses: if the employee works from home, the employer is required to pay a portion of the employee's expenses (e.g. rent, telephone and Internet). + Telephone or Internet costs when traveling, if necessary.
When is an advance on expenses appropriate?
When your employees incur expenses on behalf of your company, you have to reimburse them. In the case of small, one-off expenses, employees often pay the costs out of their own money. On the other hand, if the expenses are numerous, recurring or disproportionate to the employee's salary, the employee may not be in a position to cover them. It's in situations like these that it makes sense, for both the company and the employee, to set up an advance on expenses.
To set up an advance on expenses, you first need to make a precise estimate of the expenses that will be incurred each month. Identify whether these are recurring expenses or temporary mission expenses.
The advance on expenses is not strictly speaking an obligation, except in cases where: + it is customary within the company + the collective bargaining agreement governing the company defines it as an operating rule + the company agreement provides for it.
Different types of advance
The permanent advance
The permanent advance on business expenses is the best solution for covering recurring expenses. This type of advance can be used, for example, by traveling sales representatives who are constantly on the move.
The permanent advance consists in defining a fixed amount allocated to the employee each month to cover expenses. Generally, the advance on expenses is negotiated at the time of hiring and remains applicable for the entire duration of the contract, unless modified by an amendment. To ensure that both the employer and the employee understand what is involved, it is essential to make a precise estimate of the amounts to be incurred.
The employee then fills out a monthly expense report, which will enable him or her to justify expenses and be reimbursed for the additional amount if the expenses exceed the advance paid.
One-time advance
The second option is to set up a one-time advance on business expenses. This is usually the solution chosen to meet temporary expenses incurred during a temporary assignment, such as a trip abroad.
In this case, the advance payment is made by transfer to the employee's personal account, after estimating the expenses he or she will incur.
On returning from an assignment, the employee fills in an expense claim form and sends it to his or her manager, together with the necessary supporting documents. If the total amount exceeds the advance initially paid, a supplement is paid to cover all expenses.
Why avoid using advance payments?
While in some cases the advance of expenses is a more comfortable method than reimbursing expenses after the fact, it is nonetheless complicated to manage, since it requires a precise estimate of each employee's expenses.
The processing of expense claims remains a time-consuming process. In addition to checking all the information and receipts, you also have to calculate the difference between the amount of the advance and the amount actually spent. An additional workload in an already time-consuming expense claim process.
Prepaid cards: a simple solution for managing expense advances
New technologies, and neobanks in particular, are coming to the fore with their solutions to make everyday life easier for companies. When it comes to managing expense advances, the neobank account offered by Anytime is a particularly simple and reliable solution.
How does it work?
With an Anytime pro account, you benefit from several professional plastic and virtual Mastercards to pay for purchases. Linked to your pro account, these cards can be fully configured by your referents via the dedicated application. They can modify the card limits as required, or block them in the event of loss or excessive spending. Better than advancing expenses, an envelope is thus made available to each employee via his or her prepaid card, without the money actually leaving the company's treasury.
For their part, employees pay for their business purchases with their prepaid card in the same way as with a standard debit card. The manager is notified in real time of the expenditure. The employee can then immediately attach a receipt, thanks to a simple photo taken from his or her phone. All the manager has to do is accept or reject the expense with a single click. No more expense reports to fill in, everything is filed in the application and can be transferred directly to the accounting software.
By relying on neobank accounts and prepaid cards to manage your employees' business expenses, you're choosing to abandon archaic methods and enter the digital age. A decision that will undoubtedly be appreciated both by employees on the move and by the departments through which the many expense reports usually pass.
