How to Manage BYOD Expenses for Employees?

January 27, 20201:59 pm746 views
Generic placeholder image

Arxan report showed that allowing employees to use and bring their own device can get the work done faster, with half of the respondents (43 percent) cited that improved productivity is their primary concern. The vast majority (85 percent) also believed that BYOD policy will bring greater level of service and productivity. 

Another survey by Frost and Sullivan found that using portable devices for work tasks saves employees 58 minutes per day while increasing productivity by 34 percent. In fact, due to the positive impact of bringing and using own devices, the number of an employer who incorporates their employees to work with personal devices has increased. BYOD market is on course to hit almost $367 billion by 2022, contrast rise from $30 billion in 2014. 

However, how should you support employees if they use a personal device for work-related matters? 

When adopting a BYOD policy, employers need to find a way to support employees in regards to managing their expenses. According to Aberdeen survey, a company with 1,000 mobile devices spends on average an extra $170,000 per year on BYOD compared to the costs of providing corporate-owned phones. This happens mostly due to behind-the-scenes expense-management issues. Fortunately, however, an employer can now provide mobile reimbursement or mobile allowance to employees for their use of work-related personal devices. 

See also: BYOD: A boon or bane?

Mobile Reimbursement 

Mobile reimbursement (mobile stipend) is an act of compensating employees for an out-of-pocket expense they use for their credit by giving an amount of money equal to what was spent. The reimbursement is usually given to employees after employees submit expense reports. 

According to Samsung Insight, companies can give monthly payments of cellular stipend that are intended to cover some or all of the user’s cellular service plan. Compensations might be made through payroll stipend, or through a telecom expensing system. For this type of payment, employers could expect to spend at most between $30 and $50 monthly.  

In terms of tax reimbursements, PwC survey revealed that there should be an agreement between employer and employees at first. Tax reimbursements also vary depending on the service such as direct or indirect, reimbursement of cost or service rendered cost, etc. Here are essential points for a payment to be regarded as reimbursement: 

  • The actual liability to pay should be of the person who reimburses the money to the original payer. 
  • The liability should be clearly determined. It should not be approximate of varying amount. 
  • The liability should be crystalised, meaning payments that are never required but are made just to avoid a potential problem might not qualify.
  • There should be a clear ascertainable relationship between the paying and reimbursing parties. Thus, alleged reimbursement by an unconnected person might not qualify. 
  • Three parties should exist in a case of reimbursement – payer, a payee, and a reimburser (the person reimbursing the amount to the payer). 

For mobile reimbursement,  HR department should set a policy regarding the payment and amount of money spent. It helps the employer stay safe when there is willful misconduct such as when the mobile report shows a higher amount than it should be. In creating the reimbursement policy, you can consider the following points: 

  • The workflow of employee expense as well as seniority in the workforce. 
  • The maximum money stipend given, for example, managers get max $150 per month, executive and engineer get max $80 per month, etc. 
  • Create an independent department to vet the claims for consistency. 
  • Remember that there might be exceptional cases where managers only approved of the total claims or on an ad hor basis. For instance, managers will only be given 20 percent of the total claims due to inactivity or long-term absence. 
Mobile Allowance

Mobile allowance is a fixed monthly money coverage given without or before expense reports by an employer to employees for work-related use of a cell phone. 

To illustrate, your company is giving US$100 / mobile allowance per month to employees. The mobile bill, however, exceeds the money given as it shows US$150. Thus, the whole tax tempted as the whole amount was reimbursed and the additional US$50 will be in employer’s out-of-pocket expenses. Yet, if the mobile allowance (US$100) is greater than the monthly mobile bill (US80), the employer will get tax exemption for only the amount spent. And the remaining balance will be in the employer’s taxable income.

Which one to use? 

Fixed-mobile allowance might give less trouble regarding taxation and rules as you have set the monthly allowance and it is what your employee gets. On the contrary, cellular reimbursement is quite complicated as it needs further research and calculations. However, when you want to get a final decision, you might need to consider the business you are running, the level of employees, and the requirements of business travel. 

Some business might be suitable for mobile reimbursement while some others find comfort in giving a fixed-mobile allowance. The effectiveness can be monitored in the profit and loss (PNL) system. PNL is a record that provides information about the company’s ability to generate profit by increasing revenue, reducing costs, or both. 

Read also: Pros and Cons of Implementing BYOD Policy