These faulty and costly expense reports fall through the cracks because finance often doesn't have a system to monitor and flag them. Without an automated system, finance simply doesn't have the manpower to go through each expense report separating business calls from personal ones. Even direct managers don't have that kind of time to spend on expense-report approvals.
Then Aberdeen Group shed light on the hidden cost of expense reports, whose numbers blossomed under a BYOD plan. A single expense report costs about $18 to process. Thus, the average $70 monthly reimbursement of a phone grew to nearly $90 per month. It's one of the reasons why a company with 1,000 mobile devices spends an extra $170,000 per year, on average, when they use a BYOD approach, Aberdeen reported.
It's no wonder BYOD expense reporting is giving ground to an automatic, flat stipend appearing on an employee's paycheck. The stipend offers many advantages over expense reporting. For instance, the stipend doesn't have monthly variations, such as outrageous spikes from international charges. It bypasses the hidden costs of expense reporting and monitoring.
But stipends presented a wholly different set of troubles. Some employees game the system by qualifying for the largest stipend they could get away with, and then buying a much cheaper phone and plan. This means the stipend is essentially reimbursing for a "zombie" premium phone and data plan that don't exist, and the employee is making a little extra money on their paycheck in an underhanded way.
Taxes Take Toll on BYOD
There is another major problem with stipends: taxes. In many cases, the employee receiving the stipend has to pay taxes on it. "When we went to our payroll department, 'stipends' was a nasty word because of the tax implications," says an IT executive at a large manufacturing company.
Both that manufacturer, with 4,500 people enrolled in its BYOD program (at least those receiving payments), and Nationwide, with 7,000 people, chose the Cass system, an expense management system with an interesting method of doling out BYOD payments. Cass has relationships with major wireless carriers and issues payments directly on an employee's phone bill in the form of a credit. There's no expense reimbursement, no paycheck stipend. Even wireless carriers are getting into the BYOD payments game directly, with AT&T offering split billing.
Cass's tiered payment system is also pretty novel. At the manufacturing company that spoke to CIO.com on the condition of anonymity, BYOD employees fall into one of five categories:
A tier-0 employee does not get any reimbursement
A tier-1 employee rarely needs to be contacted outside the office and receives $35
A tier-2 employee spends about half the time outside the office and receives $50
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