2020 Expense Trends Unveil Business Resilience
2020 will be remembered as a year of dramatic change. And for business, it was the year that COVID-19 made them think the way we work. During the peak of the first lockdown phase, around one-in-four (26%) companies across the globe had paused operations.
As a result, millions of jobs were furloughed, lost, or changed as workforces adapted to the ‘new normal’ of remote work. It was a turbulent 12 months but one which also helped to highlight the remarkable resilience and adaptability of businesses and finance teams.
This is a story that’s highlighted by the Webexpenses data report for 2020.
With more than 300,000 users across the globe, the data collected over the year shows how finance teams adapted to monumental changes to keep finance functions flowing as businesses continued to operate against the odds.
Here’s a look at the three main themes to emerge:
Expense claims are here to stay
How people were managing and processing expenses aligned with the changing levels of COVID restrictions. Unsurprisingly, expense submissions were at their lowest during the height of the first global lockdown phase over April and May.
This was the period where the majority of businesses worldwide switched to having remote-working teams and non-essential business travel was paused. During this time, employees were still claiming frequently for non-travel related costs but overall claim values were lower.
By September, as governments around the world eased restrictions and borders reopened, business travel started to resume and employee expense activities quickly recovered with submissions increasing by 125%. Finance teams managed this spike despite many themselves having to handle the shift to remote operations.
October saw the level of expense submissions returning to just 2.5% below the regular pre-COVID-19 rates. Despite all of the challenges faced, the continued submission of expenses remained remarkably consistent.
Changing nature of business travel
While new types of expenses emerged, business travel was hit hardest by the pandemic. During the lockdown periods, the volume of mileage claims dropped, but they started to recover as lockdown rules began to be relaxed.
The largest mileage claims were made during August after the UK had exited its first lockdown and levels of business travel returned to slightly more normal levels. One notable change was a greater reliance on road journeys over public transport.
This is a trend that looks set to continue in 2021 as business travel adapts to the realities of social distancing. With the roll-out of vaccines and effective tracking, business travel looks set to make a strong recovery with analysts predicting a full return to normal by 2022.
New expense categories emerged
As finance teams adapted, expenses policies were being revised and updated to cater for newly-remote workforces. From August onwards, new expense categories emerged and existing ones grew such as the categories covering home office costs. These included IT equipment (such as PCs, laptops), office furnishings, and domestic bills such as heating, telephone, and broadband.
Also seen were expenses relating to COVID-19 prevention measures with expenses for PPE (face masks), hand sanitisers, and travel relating to tests and training. Some businesses also reimbursed their employees for donations made to COVID-19 support groups.
Many of these new expense categories quickly became the top claim items for 2020 and will continue to do so going forward. It shows the importance of having a finance function that has the flexibility to evolve and change over time.
What it meant for 2020 - and the year ahead
Despite all the challenges posed by 2020, the data shows how finance teams maintained effective control of costs throughout a volatile year. It’s a testament to the resilience and adaptability of workers and the power of digital expense management.
A cloud-based expense system future-proofed businesses to handle the changing expense needs and provided a central hub where finance teams could instantly update and track and enforce revised policies across a remote workforce.
With a fully paperless process, 71% of the submissions during 2020 were handled via the web and 29% used the Webexpenses app. It unlocks a flexible way of working which allows policies to be instantly updated, new categories created and home office expenses easily administered.
Whilst business travel has been historically the largest area for expense claims, we can see how businesses changed to adapt in 2020. And with the onset of vaccination, 2021 brings a positive outlook for businesses worldwide as we all seek to recover and help to rebuild the economy.