Would You Like a Receipt With That?
Whether relocating across town or across the globe, a move can be challenging for your employees and their family. From caring for their family’s needs while organizing the sale of an old home and purchase of another, to making sure they settle into their new position as quickly as possible to meet business objectives—there’s a lot to consider. One (albeit) rather small but time-consuming administrative task for employees is the submission of expenses, especially if your company requires itemized receipts for each individual expense. So how do you make the expense reimbursement process smoother for relocating employees?
Work with Your Relocation Services Partner
If you work with a relocation services partner, they will be able to provide support to streamline your expense reimbursement process. At Cartus, for example, our expense analysts perform rigorous audits that incorporate an expense “reasonability test” along with a client policy audit to match expenses to your company’s relocation benefit provisions. These audits ensure the intentions of your benefit offerings are honored throughout the relocation. If an expense does not pass an audit, it is deducted from the disbursement and the employee is advised the line item is outside of policy provisions.
U.S.-based companies with a global relocation program typically follow company travel and entertainment policies, which were often based on historic U.S. IRS protocols. From a global compliance perspective, modernizing these policies would not only benefit your relocating employees but would also lend to productivity gains for internal business travel expense audits.
We recommend considering a $75 threshold for receipts on meals, incidentals, and travel expenses (assuming they meet the expense audit). This is in accordance with current IRS guidelines for business expenses*, which require receipts for any expense that is $75 or more. Implementing this policy change will reduce the administrative burden on your relocating families during an already challenging time. Furthermore, with fewer receipts to track, employees will be more inclined to submit their expenses in a timely manner.**
In a case study comparing two Cartus clients, one with a $75 receipt minimum and one with a $25 receipt minimum, we found the employee satisfaction level for expense processing during their move was 15% higher for the client with the $75 receipt minimum, resulting in 86% rating their experience as “Excellent”—up from 71%.
Employee Experience: Continued Improvement
Organizations looking to further improve the employee experience for U.S. domestic relocations, may also consider removing receipts entirely for meals, replacing them instead with a daily meal per diem approach. This small adjustment can reduce the complexity of seeking reimbursement, as well as the burden of employees having to pay up front for meals. The per diem funding would continue to follow your policy guidelines and only be allocated to authorized recipients under authorized benefits, e.g., home finding for employees and partner/spouse or final en route for all accompanying family members on the day of the move.
For more information on cost of living allowances, read our blog, Rising Inflation and the Importance of a Cost of Living Allowance. Alternatively, please contact your Cartus representative or email firstname.lastname@example.org.
* IRS Publication 463 Travel, Entertainment, Gifts section 5, page 25 Recordkeeping. The IRS instituted the $25 receipt minimum in 1962. In 1995 they changed the limit to $75 with the exception of lodging.
**Does not apply to organizations administering under FAR or FAO PIAO requirements.