There are four reasons getting expense management right is worth the effort.
1. Expense processing is expensive in itself. The Global Business Travel Association puts the average cost of processing a single expense report at $58 (around £46), with one in five reports containing errors that add another £52 and 18 minutes to fix. For a finance team processing 500 reports a month, that is roughly £29,000 in processing costs and another £5,000 in rework. That is pure admin overhead, none of it adds value to the business.
2. Manual processes hide fraud. The Association of Certified Fraud Examiners’ 2024 Report to the Nations found that expense reimbursement schemes account for 13% of occupational fraud cases, with a median loss of around $33,000 per case and an average 18 months between fraud starting and being detected. A separate 2024 survey of over 1,000 employees by Emburse found that nearly 24% admitted to passing personal purchases off as business expenses. Paper trails and spreadsheets make those claims trivially easy to hide.
3. HMRC compliance has real money on the line. To reclaim VAT on business expenses, you need valid VAT receipts or invoices with the correct tax split. Soldo’s own research with Coleman Parkes found UK businesses lose around £19 billion in unclaimed VAT each year, with £3.8 billion of that lost through errors in how receipts are processed. Making Tax Digital for VAT has been in force since April 2019, and MTD for Income Tax Self Assessment begins April 2026 for sole traders and landlords earning above £50,000. Digital record-keeping is no longer optional.
4. Hybrid working has changed the risk profile. Employees making purchases off-site, sharing card details over messaging apps, and submitting receipts weeks after the fact have made the gaps in traditional expense management more visible. Phishing scams targeting finance teams have grown in parallel. The traditional approach was never strong; remote work made it weaker.
How most businesses still do expense management
There are three traditional approaches, and most UK SMEs use a mix of all three.
Petty cash. A fund the business holds in physical cash that employees draw from for small purchases, replacing the cash with receipts. Recorded in a petty cash book or ledger, topped up at the end of each accounting period. Still common, despite the obvious problems: cash gets lost, receipts get lost, and every transaction has to be entered into accounting software manually because there is no bank feed to pull from.
Out-of-pocket expenses. The most common SME method. Employees pay with their own money and claim it back later, usually via a spreadsheet at month-end. It strains employee cash flow, creates resentment when reimbursement is slow, and produces expense submissions full of categorisation errors. Finance teams spend hours decoding what each line means and chasing missing receipts.
Corporate credit cards. Removes the cash-flow problem for employees but introduces a different one: lack of control. High credit limits, monthly reconciliation cycles, and no spend-by-category rules mean unauthorised purchases can sit undetected for weeks. Mid-month statement cut-offs add a layer of reconciliation work that does not exist with other payment methods.
None of these are wrong in themselves. The problem is they all push the work to the wrong end of the process, into reconciliation, chasing, and correction, instead of stopping it from happening in the first place.
