Thursday, July 19, 2007

Work Related Expenses: Money Out of Your Pocket

I just finished filling out my expense reports for the past several weeks. I filled out a total of five expense reports, with the expenses totaling in excess of $3,500. Granted, I spent the majority of this amount during an extended international business trip that I just finished on Monday. However, when you think about it, between the time I spend the money and the time my employer reimburses me for the expense, I am giving my company an interest free loan. That's not a great arrangement from my perspective.

I am guessing that on average it takes me about two to three weeks to fill out each expense report. You know how it is. You really plan to do it, but all of a sudden the week is over and all those receipts are still languishing in your wallet. When I finally do fill out the reports, it takes my employer another two weeks to reimburse me. All in all, from the time I spend the money until the time I get it back, about four or five weeks pass. The value of this free credit is approximately $4.1 per month for each $1,000 in expenses - assuming that the funds would have been deposited in a high yield money market account during that time. If you are paying credit card financing charges to finance your unreimbursed expenses, the calculation may be much less attractive for you. That's not a huge amount, but still.

There is another way that I lose money through the expense reimbursement process. Sometimes I misplace a receipt; forget a certain activity that I paid for; or make a mistake in adding up the numbers in the report. I am guessing that I don't always recover 100% of the amounts I spend, even though I make an effort to account for everything. The more time passes between the time I spend the money and the time I fill out the expense report, the more errors I make and the more money I leave on the table.

Given all the free money I am supposedly giving my employer, you would think that my company would be delighted and encourage people to delay filling out their expense reports. Not so. My company is really pushing people hard to file their expenses within 2 weeks of spending the money. It's not that they are altruistic, they simply want to have complete control and visibility as to how they are spending money.

I am making an effort to improve my evil ways, but if I were you I wouldn't bet on success in this category. It is one of those things that I can always find an excuse to postpone to the next day. At least for this trip I remembered to file my expenses within 24 hours of my return. Here's to small victories.

Anyway, in tomorrow's post I will cover the bright side of business expenses. Sometimes they actually make you money...


frugal zeitgeist said...

You just hit on something that irritates the crap out of me. I fight back where I can. I use my corporate AMEX for as much as possible; if the bill comes due before I get reimbursed, I simply call AMEX and ask for an extension. They're nice about that for corporate customers and it doesn't show up as a ding on my credit report. We now have a system where as long as I have access to a fax machine, I can reimburse expenses on the same day I accrue them and I get reimbursed within eight days. It's still an interest-free loan, but it's not as painful as it used to be.

Shadox said...

Expense reimburesments are a hassle. The only way I can think of to completely eliminate the headache is for all expenses to go on a corporate credit card that is paid directly by the company. That would only work in large companies - like the one I think you work for Frugal.

Two of the guys that work for me now routinely ask for pay advances before incurring any work related expenses. That's a really good idea, but somehow I never find the time to deal with these things in advance.