Once upon a time, HR tech was all about the two Ps – People and Policies. But with flexible benefits, salary sacrifice schemes and spendable allowances all becoming regular parts of HR platforms, there’s a third P that’s joined the list – Payments.
Now that HR tech is either already home to smart money flows or planning to adopt them soon, the next question is what else can they be used for? How else can they help HR and people teams elevate employee experience?
And while it’s not the only answer, there is one natural place HR platforms can start – by bringing pre-approved employee expenses under their umbrella too.
A poor expenses process is a death blow for employee experience
Before we get into how HR tech can extend their platform into the world of expenses, we need to answer why they should. After all, how much does HR really overlap with employee expenses?
An awful lot, it turns out, and it all comes down to the core aspect of the HR function – employee experience. According to Weavr research, the expenses process plays a non-trivial role in determining how employees view where they work – as many as 85% said that their experience of claiming back expenses influenced what they told prospective colleagues about their employer.
When they’re used to slick fintech experiences like Monzo and Revolut outside of work, they look at slow, outdated processes for claiming expenses, receiving stipends or accessing wages and wonder, “Why can’t we do this better?”
Our research also found that 42% of employees said their current expenses process had a negative impact on their financial health. And with employees citing financial health as their highest wellbeing concern, it’s no wonder HR teams are facing more expectations to address financial wellbeing directly.
In fact, it makes so much sense that HR platforms are already making their tech capable of handling expenses. For example, Factorial offers expense management software that lets users track and approve expense payments via their mobile app, and issue corporate expense cards to employees.
Meanwhile, Sage’s expenses module gives employees an easier way to submit expense claims by photographing receipts and automatically creating expense entries.
An elegant solution to an age-old problem
Now that we’ve talked about the why, let’s talk about the how.
The solution is fairly straightforward, at least from the end user’s perspective – pre-approved, rule-controlled spending cards. In other words, physical or virtual cards issued to employees through their HR platform to use for expenses payments, and locked through rigorous spending controls to specific merchants, amounts, regions and timescales.
If that sounds familiar, it might be because it’s not a world away from the mechanisms that make flexible benefits schemes work. And this is another part of why expenses management fits so well within the HR tech ecosystem. It’s not a pivot, it’s a natural progression of the embedded payment flows that are already at work in the market – and that 92% of SaaS product managers are planning to implement this year.
The only difference is that instead of giving an employee a pre-approved and loaded card to spend on their choice of fitness reward, you’re giving them a card to cover client dinners or conference expenses.
Who’s the winner when expenses management meets HR tech?
At first, the answer seems obvious: it’s the employee who wins in the end. If you can deliver them a slick expenses management system that’s built on pre-approved spend cards, you’re saving them the hassle – not to mention the financial burden – of filing traditional expenses claims and waiting a month or more to be reimbursed.
They’re not the only ones though. As we’ve already mentioned, HR teams and People Ops know all too well the impact that a cumbersome expenses process has on the employee experience that’s under their watch. And what makes this such a source of frustration for them is that they likely aren’t involved in handling expenses claims and reimbursements – at least not in larger companies – so while they hear every complaint about the process, there isn’t much they can do about it.
But if HR tech brings expenses management under its roof, that brings FinOps into play as a new class of user for the software. Now they’re able to set the guardrails for expenses while streamlining the process by issuing pre-approved virtual cards and automating claims.
In other words, expenses go from being a problem HR hears about to a problem HR tech can solve. And all the while, your software’s new FinOps users love that they have real-time expenses data to close up reporting blind spots, and your platform has a new foothold with more parts of the organisation.
If you’re wondering what place embedded finance might have in your innovation roadmap, set up a meeting with one of our experts.
