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Wednesday 18.07.2018 | Name days: Rozālija, Roze
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Survey: control over employees’ bonus pay is weak

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUNearly every second company in Latvia pays wages to employees with cash or direct transfers to their private bank accounts. This basically means they lose control over company funds, according to results of a survey performed by WestStein and Kantar TNS in Latvia.

Company managers entrust debit cards to their employees for different everyday expenses – office expenses, client relations, gifts, lunch, flowers – only in 18% of cases.

«It should be said that small and medium-sized companies have limited options to control employee expenses. While large companies can afford to have internal rules and pay for services, small and medium companies have to look for alternatives,» – says WestStein board member Signe Kalnina.

38% of respondents said their current employee expense control requires more transparency.

«One of the main conditions to ensure financial health of companies is money flow control. Under the situation when advance payments are performed in cash money or by means of money transfer to the employee’s personal account, this control becomes less transparent,» – Kalnina says.

According to Kalnina, this is not just about fraud risks, but also improper use of time and other resources.

Traditionally, the advance payment procedure has at least seven steps: the order stating the employee can be a recipient of the advance payment; the employee’s application to be provided with advance payment; the manager’s order to the accountant to perform the advance payment; the accountant’s entry regarding the payment; the transfer of the money to the employee’s account or issue of cash; after the money has been used, the employee needs to submit a report on the use of the money and present documents confirming transactions and the accountant then needs to document each receipt and record the advance payment, the company’s representatives say.

«The process requires the involvement of the employee, the manager and accountant – it need to be done again and again. Of course, it is possible to issue a company card for advance payments, but owners often do not wish to provide employees with such wide access to company funds. This is understandable, because company debit cards are traditionally attached to the company’s main bank account,» – note WestStein representatives.

They say there are multiple financial technology solutions available on the market to help companies shorten formal procedures and maintain control over finances.

«One solution is using pre-paid cards and carrying out preparations. This can help reduce the time needed to perform advance payments nearly two times. 16% of interviewed businessmen note that they would like there to be less formalities with money issue process to employees.»

To simplify the advance payment process, it would be a good idea to state in internal documentation that pre-paid cards are to be used for advance payments, establish persons responsible for the advance payments and define specific limits on expenses. The company’s accounting policy should provide for accounting procedures for pre-paid card account activities, representatives say.

Ref: 224.109.109.5923


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