Payroll: Is it the best way to pay expenses?

How payroll expenses are processed

Payroll, taxes, and National Insurance contributions (NIC) are typically deducted from the employee’s paycheck or the employer’s account. These contributions depend on what kind of business you have and where you’re located. Some jurisdictions also allow for different rates for different professions or industries.

Why you should avoid paying employee expenses through payroll

1. Employees might not remember to submit their expenses before payday, which means there will be painful reconciling for the finance team. And, if they do submit them on time, you will still have to ensure they were entered correctly and approved by management before adding them to the payroll to be paid.
2. In most cases, finance teams will also need help to trace the expenses back to specific purchases or vendors, which is particularly difficult when employees submit multiple expense reports per month or pay period.

Why use a spend management solution like Payhawk instead?

Smart spend management solutions, like Payhawk, feature expense management software equipped with automated data entry and automatic receipt chasing.

Payhawk has many benefits over traditional payroll processing systems. For example, employees can save time waiting for approvals or sending emails to request reimbursements. And they also don’t need to worry about losing receipts or losing track of all their expenses. Instead, they can make a purchase, enter their associated receipt via the platform, and get reimbursed instantly using the mobile app from anywhere with an internet connection.

Or even better, they can use a corporate visa card from Payhawk, which is directly connected to the expense software and topped up with funds according to budgets (so no need for reimbursements at all). The benefits of managing expenses via company cards powered by clever expense management software include the following:

1. Employees pay with their card, which has the company’s expense policy built in via a mix of spend limits and approval workflows, meaning better compliance and more opportunities to save.
2. Employees can use the mobile app for expenses like business travel expenses and everyday purchases. Expenses made with corporate cards can be managed and updated with receipts in a couple of clicks. And if they don’t update a receipt? The platform automatically chases them, so you don’t have to.
3. You and your finance team can build in custom spend categories via the platform. Each time employees make a purchase; they can choose from the categories, ensuring that each expense is assigned correctly (and synced seamlessly with the business accounts).

Adding more work to your accounting system can cause more headaches than it’s worth and increase costs related to compliance issues such as audits and record-keeping requirements from HMRC.

Furthermore, using an automated solution like Payhawk provides several advantages over traditional payroll processing methods:

• Employers or managers no longer have to wait around to receive expense reports just in time before payroll.
• It’s easy for employees because all they need to do is enter the required information, submit it, and go about their day. And that’s it.

Our platform integrates with many major accounting software providers, such as Exact, Xero, and Quickbooks. We also integrate directly with some popular ERP solutions, like NetSuite. The seamless integrations and instant data syncs are among the reasons finance teams around the world trust Payhawk to make managing expenses more straightforward.

Summary

In today’s fast-paced world, finance teams need a more streamlined approach to employee expenses. Spend management solutions, like Payhawk, can help businesses avoid the pitfalls and drawbacks of paying expenses through payroll.

Ready to hear more? Book a demo today, and let’s talk about easy expense management.

By Payhawk