As cost of living peaks, it’s time to end expenses

During the pandemic, expenses slowed quite significantly. But as the economy reopened, we’ve seen a sturdy resurgence in out-of-pocket expenses.

When you begin your career, you quickly learn there are things that simply come with the territory in a professional setting. It runs the gamut, from the burned coffee produced by a machine that’s seemingly always breaking. Or sometimes inscrutable IT systems that leave us struggling to print a one-page report.

Expenses are another one. It’s widely accepted that workers pay out of pocket for work-related expenses. And then this money is reimbursed after some time. This has never been a popular set-up - not for employees (or, indeed, for finance teams who spend days reconciling and verifying expenses). And yet, this system rumbled along. Despite no one being particularly enamoured with it. And then the Coronavirus pandemic happened.

Making expenses fair

During the pandemic, expenses slowed quite significantly. But as the economy reopened, we’ve seen a sturdy resurgence in out-of-pocket expenses. In Soldo’s research done alongside Ipsos, more than half of employees said expenses have increased since November 2021, and 46% say they’ve increased significantly. This is expected, of course. But we should contextualise this within the wider economy. 

It’s no secret that the macroeconomic outlook is pretty gloomy right now. In particular, we’ve seen a cost of living crisis take root. As of January 2023, 92% of UK households reported that their cost of living had increased compared with a year earlier. And despite vigorous efforts by the Bank of England and policymakers, inflation has remained high.

The trouble with expenses 

The formula of paying out of pocket and then reclaiming the money rests on an assumption. That is that the worker in question has a certain amount of financial resilience. They have access to credit (and enough credit limit left) or just have spare cash to act as a hedge.

That assumption has never really been fair. But especially now, it’s out of step with what’s happening in the UK. The reality is that employees are, in increasing numbers, unable to pay out of pocket. In our research, 72% of employees said business expenses impacted their personal finances. Out-of-pocket spending ate into savings, increased credit card balances, reduced budgets for life essentials and affected financial resilience.

The reimbursement bottleneck

 At the same time, reimbursement remains a stubbornly slow and time-consuming experience. Almost three-quarters of employees said they had needed to ask their employers to reimburse them sooner. We also need to reframe our ideas of who is affected by cost of living pressures. Our research shows conclusively that the issues with out-of-pocket spending run all the way through your organisation.

Almost half (43%) of those earning £70,000 and over say that their out-of-pocket expenses “increased significantly”. And 58% of these earners reported being “always or often anxious” about paying out-of-pocket. It’s not a ‘junior’ or ‘low-income’ issue: It affects everyone (including your most senior and skilled staff).

The fairer alternative

The better, fairer alternative to the prevailing system of expenses is company cards. These cards let employees buy what they need to get the job done. They also end out-of-pocket spending, give employees controlled access to company money and save everyone time on expense reimbursements.

For CFOs and finance teams, it also opens a whole new world of detail and insight. You can see what’s being spent in real-time. You can set who spends company money, where, and how much. Set card limits and spending policy profiles to prevent overspending. And you can categorise expenses and spot spending patterns, at a glance. In business, win-win isn’t always possible. But on the expenses front, the better alternative is there. You can end out-of-pocket expenses and reimbursement at a time when your
employees are struggling to make ends meet.

At the same time, you can keep budgets on track, assert control of company money and eliminate the relentless cycle of reimbursement that eats into the finance team’s working hours.

Almost two-thirds (62%) of employees say reimbursement should be replaced with a system of company cards. Get your copy of The Cost of Business Crisis to find out more.


Soldo is the prepaid Mastercard® company card that does your business expenses for you. Control, track and report spending all in one place.

You may also be interested in

Discover the 5 unusual routes guests on the CFO Playbook podcast took to becoming CFOs, and what their journeys can teach us about the skills required to excel at the top job.
Finance TransformationTechnologyFinance Leader
Discover why effective cash management is crucial for businesses, ensuring timely financial obligations are met and guiding companies to success through robust cash planning.