This year, we’re celebrating fifty years of the corporate card. Introduced back in 1968, the UK’s first company credit card was a Barclaycard innovation milestone, allowing businesses to make flexible payments and keep track of employee expenses.
Fast forward five decades to today, and Barclaycard now has more than 250,000 business clients in the UK.
Corporate spending has evolved significantly since 1968, with the petty cash drawer now a distant memory in many organisations. To mark the corporate card’s 50th anniversary, we take a look at how our business spending habits have changed over the past half a century.
Expenses now and then
Recent Barclaycard research has identified a steady decline in workplace expenses over the past 50 years, with companies tightening the purse strings when it comes to wining and dining clients.
The 1960s were the ‘golden age’ of workplace expenses, with more than three times the number of employees regularly claiming for the cost of meals, drinks and travel compared with today’s workforce. In 2018 we claim an average of £907 a year - less than half the comparative value regularly claimed in the 1960s and 1970s (£2,335 and £1,854 respectively in today’s equivalent money).
Back in the ‘Mad Men’ era, the lunches were long and client entertainment was lavish, with 34% of employees regularly claiming for dinner at a restaurant with a client. This figure has slumped over the years, hitting 28% in the 1980s and dropping to around 10% today.
Three-martini lunches are history, with just 13% of workers claiming for lunchtime meals out with clients, compared to 36% in the 1970s and 37% in the 1980s.
The number of employees who say they regularly submit receipts for rounds of drinks has also fallen dramatically - approximately a quarter of the number who did so in the 1980s.
Travel expenses tail off
Despite taking off slightly later than client entertainment, corporate travel has also seen a change in direction in recent years. In the 1980s and 1990s, 48% of workers claimed for hotel accommodation, compared to 25% today. Charging flights to the boss has taken a nosedive from its 19% peak in the 1990s and early 2000s to a more modest 12% in 2018.
Only 14% of employees currently file expenses for taxis hailed on the street, compared to 22% in each decade throughout the 1980s-2000s - although the rise of ridesharing apps like Uber mean expense claims for pre-bookable taxis have grown from 8% in the 1960s to 15% today.
A sign of the times
It’s not just what we’re paying for that has changed, but how. Almost two-thirds of today’s employees file their own expense claims compared to just over a third in the 1960s.
In the early 1960s, prestige was everything and employers tended to adopt a more laissez-faire attitude to expenses. Having taken your client out for an expensive evening of dinner, drinks and entertainment, you might give your receipts to your secretary, who in turn passed it onto your employer’s finance team so you could be reimbursed; either in your wages or from the petty cash drawer. With individual limits and easy-to-understand statements, the arrival of the corporate card helped streamline the process for both parties, providing easy-to-understand statements. Today, employees are more likely to submit claims themselves - and much less frequently.
Why the change?
The corporate card helped kick-start a technological revolution in business finance. From pre-bookable taxi apps to expense scanners, every new wave of innovation has helped simplify the process, delivering more transparency and insight. This accounts for part of the drop in expense spending - but only to a point. The rest can be explained by major changes in the way we do business.
The process of making purchases and claiming expenses has been transformed over the years. 36% of employees cite the process of submitting expenses becoming more formal as the reason for their shrinking pile of receipts, while 32% cite that the range of items eligible for expense claims has narrowed. While one in five workers had their personal office assistant file expenses for them fifty years ago, today this is true for just 17% of the workforce.
A recent Barclaycard survey has revealed that 48% of UK workers who incur expenses are still using personal funds to cover business costs, collectively missing out on £962 million by failing to submit all of their claims. In the last year alone, the average value of unclaimed expenses totalled at £123 per person.
Top reasons given by employees for unsubmitted expense claims include lost receipts and the value being ‘too low to be worth the hassle’.
Those receipts here and there add up and can have a serious impact on workers and their personal finances. Considering that less than one in five employees have access to a corporate card, it’s perhaps unsurprising that half are frustrated that they have to wait to be reimbursed for expenses paid out of their own pockets. 37% of survey respondents said they had faced cash flow issues after paying their own expenses and one in ten said they had missed a payment on a personal credit card as a result. This all indicates a strong need for employers to take steps to implement a fuss-free expenses process wherever possible.
Continuing to innovate
Barclaycard Commercial Payments is helping keep that experience fuss-free.
Barclaycard Precisionpay, our virtual credit card solution for businesses recently unveiled its bank transfer facility, offering a highly secure, flexible and convenient way for companies to pay suppliers who don’t accept cards. Not only does it give businesses greater control over cash flow, it also makes it much easier for businesses to manage the number of payments that need to be reconciled each month.
Embracing new opportunities in digital B2B payment innovations allows even small businesses to access complex solutions and move away from traditional payment methods to safer and more efficient options. In addition, strategic collaboration with fintech companies, such as Crowdz, an online B2B marketplace and Nimbla, an insurtech start-up, helps businesses adopt and integrate new technologies as we move towards an increasingly cashless society.
Going forward, we are likely to see advanced, mobile-integrated software become more prevalent, further refining the expenses process and back office functions more broadly.