> If the goal isn't actively set to help and streamline the process
In the reimbursements example, the goal shifted, by design. The environment moved from high-trust to low-trust as the department grew, and the aim moved from "keeping people happy" to "spending less money"/"not being taken advantage of". Not defending it -- I hate paperwork like this -- but it seems almost inevitable as groups of any kind grow large enough and you actually can't assume good faith anymore.
It also depends on your legal system and how much discretion it allows managers. Let me give you an example: my startup used to allow people to expense a car rental when travelling to HQ in the Bay Area, which was in general cheaper than Ubering everywhere (a daily Corolla is cheaper than two Uber rides per day unless the hotel is extremely close to the office). Some people decided to abuse that, fly in on a Saturday, rent a rather expensive car, drive the whole day around, then expense all that.
After someone noticed this was happening, the CEO decided to forbid expensing car rentals, instead of having to come up with a very detailed policy. The thing is that in my home country, the abusers' managers would have been allowed to simply deny the reimbursement on discretion, on grounds that those joy rides were unreasonable, which would easily hold in court (where a plaintiff would be automatically forced to pay the defender's attorney fees too). But due to the highly litigious US legal system, a CEO can't allow that and companies must have extremely detailed policies, otherwise they risk very costly lawsuits where even if they win they'd lose a lot of money.
Your rental car example reminds me of my own "pizza dinner for the team" example. A company I used to work for would order pizza on Thursdays for folks who were working late. No paperwork, no expenses, no manager approval--at 7PM on Thursday, 5-6 boxes of pizza would show up in the break room, and people would spend a little more time at work hacking away. Win win. As the company grew, of course, people being idiots, the free pizza got abused. People would walk into the break room at 7:01, take an entire box, and leave the office. So, sure enough, free pizza night ended.
Because it's easier to just forbid than eat the cost or (heaven forbid!) talk to people.
How much was this pizza costing the company? Pennies in the grand scheme of things. How much were the rental cars costing? Pennies. Probably a rounding error in even the smallest department's budget. You can afford to hire an army of engineers making $100K each, but $10 pizza is where you draw the line? $100 rental cars? Really???
Over the long term, yes. However, universities like Buffalo might have some peculiarities. They are overall run by the state government, and professors/students/staff are state employees. In addition, the money that pays their salary often comes from the federal government (NSF, DOE, NIH) which comes with their own restrictions and regulations beyond typical accounting practices.
So things like reimbursements are handled by a university trying to implement a state government's interpretation of both granting agencies desires and federal and state laws/regulations.
My university seems to be going crazy with rules lately. My hypothesis is that the state, and by extension the university, wants to button down everything so as not draw attention of the federal government (given who is in charge). It's taking already stressed professors (funding cuts, etc) and piling on more stress.
do you know anyone closely enough to ask and get an honest answer? in my experience, academics say this is all administrative bloat that has been increasing forever.
The level of trust didn't change at all, Joann must have read every single receipt as she filled out the forms. A fraudulent or out-of-policy expense would've been noticed either way.
High-trust doesn't mean absolute trust. Hand me a pile of receipts and I'll figure it out (probably with leeway in your favor) is much higher trust than uploading receipt, categorizing, adding explanations for exceptions, etc. One feels reasonable and still dignified. The other feels adversarial and paternalistic.
Joanne probably had to field some "sorry, this can't be expensed" situations, and/or those were reduced because people knew another human was doing the work and they'd get called out, trying to game/abuse the system was less or just naturally discouraged. That was high trust, by both the employee and by Joanne.
With the employees needing to use Concur directly, there's a tendency, since there's a diversity in how each employee will handle the specifics, to try to "save money" by denying reimbursements for any random violation, making sure all i's were dotted and t's crossed. The automated system itself encourages this because it's so low effort to deny and send the expense form back, potentially wearing down the employe that they just give up. Joanne could avoid all that at scale because there was little/no diversity in how expenses were handled. If an i needed to be dotted, she could handle it, and she knew all the i's that needed to be dotted across all expense reports.
I currently have someone to handle my expense reports who sits in front of Concur for me! And that person routinely asks me for specific detail without me having to mess with Concur at all, things like "who was at this dinner you gave me a receipt for" or "I can't find the receipt for this company card charge".
I work at an organization that uses concur. My team work at the other end of the process. They take Concur outputs and pay the claimants back. We find that somehow makes us the support department, adding users, training them, and worse still teaching them how to get around rejections. It is a bit less work for us than the paper forms I started my career with. It does rather push the overhead of claiming the expense onto the claimers though, many of which tend to be those whose time is most expensive. I'm not sure it works out.
This, the person nitpicking the Concur entries might as well have done Joanne's job and achieve two things at once. Compliance to concur and the regulatory compliance built into the concur process and not wasting everyone's time doing concur
I've seen adversarial approaches in small companies or even an individual boss and I've seen cooperative approaches in moderately large organizations.
The shift toward an adversarial approach in just about any organization is noticeable, in fact, in the US in the last 10-15 years but the US hasn't grown in size that much, large scale organizations existed much earlier.
I remember at a previous job I had to do a fair bit of business travel. The company had their own internal tool for filing expense reports.
I would do the typical thing of "take picture of receipt, upload receipt, specify how much it cost, etc.", and for the most part it was seemless and it would be sent to my bank account.
One time, I bought a box of Fiber One bars at a CVS Pharmacy and expensed that. I got a phone call from the billing department asking why I would expense something like that and I said something like "because I don't usually eat that healthy during business travel and I suspect you can guess the reason after that". They told me they would get back to me, and then I got an email telling me that they rejected the expense report and I would have to file it again to get the rest of my stuff reimbursed.
I can be a pretty petty dude, so I filed it again, completely unchanged, I get another phone call telling me to remove it, and this repeated two more times. Eventually I complained to my manager and he was able to get them to let me expense it and it all worked out.
I find it amusing, because the box of Fiber One bars was less than five bucks. I suspect all the time that they wasted of theirs and mine probably cost considerably more than the $5 would have saved from not covering it.
That is more likely a result of legal requirements. As a general rule any personal benefit you get counts as your income and is taxed accordingly. Expensing is not, instead counting as a business expense.
To avoid people just forming a personal company and declaring everything they spend a business expense and thus not taxed there are rules around what can be counted as a business expense.
If you instead want to take your salary in the form of Fiber One bars, but pay taxes on that spending in dollars, then your accounting department might have had fewer issues since they would not be mixing legally distinct costs and accidentally committing financial fraud.
Why is it a personal benefit? If I am onsite for 5-10 days, I am likely going to have 1-2 bars/day - especially if I am working a high-stress engagement where actually leaving the client site would have taken away my ability to execute to the required level of service.
At some point, policing what each employee eats and how they spend their maximum "per day/per diem" total allowance becomes a cost-drain.
I have been in orgs where some people were frugal and bought essentially groceries, so they could eat in their hotel room - some of that was dietary or health choices and restrictions. Eating restaurant food every single day for 3-meals/day is not a healthy choice (especially years ago when portion sizes were typically far too vast in some countries/regions). Then, in the same group - we had staff who would determine an average size meal - and then ensure that the tips they left would max-out to their daily maximum allowance, to "spread-the-wealth" so-to-speak.
Neither was fraudulent - we were allowed a daily max budget (it was not a per diem), we still had to submit receipts - heck, in our region if you wanted to spend your budget entirely on alcohol, there were (at the time) no red flags.
That's a non-compliant plan, I'm pretty sure. You can't just expense an all-alcohol trip to a bar because you're stressed. You're not personally in violation but the organization is violating the IRS rules for letting you do it. They'll get away with it usually, and if a tax auditor sees it there'll be modest fines unless it was systematic approach to dodge taxes.
As for "why" it's a personal benefit, that's just how we've decided as a society. We want people to pay tax on personal income irrespective of how it's spent and we want to allow businesses to pay tax on net income because to create economic value you sometimes have to spend a lot on inputs.
So we have rules for what income is taxed on gross and what income is taxed on net. For the most part, personal income is taxed on gross and business income is taxed on net. And then, to compensate for the gross taxation, a standard income deduction is offered.
Because of this difference between the way personal and business income are taxed, the classification of things into one and the other matters. A logical way for a company to restructure things given just the naïve implementation is to transfer all payment to payment in kind: the company buys your groceries, pays your rent, and so on. You love this, your taxes are lower and you still get the same benefit of the money. The IRS, therefore, qualifies what is personal and what is business. Your company cannot buy you your groceries and pretend they aren't paying you.
However, it is true that the company sometimes sends you on assignment where your costs would be higher than if you were to stay at home. In these cases, it is reasonable for them to pay for your expenses. Well, ideally, your company then always sends you on a one-day trip every month but sends you back with a Costco-haul. This would let them pay you more (you both win, the tax man[0] loses) so long as they appropriately redirect pay into in-kind. So the IRS says "you can either be careful or you can have a fixed amount for travel that works for these categories"[1].
So, "why" is it a personal benefit? It's because we have taxation, and because business and personal income are differently taxed, and because business spending has to therefore be defined. That's the broad strokes of it though there's nuance, and a lot of "well, actually" to get it out but that's the picture for the most part.
In the end, the lines have to be drawn somewhere. If you eat the office catering that's not a taxable benefit. But if you were to drive home to pick up and eat the Doordashed sandwich from the same place there and return to work, you would have eaten identical food and perhaps done identical work, but the treatment is different. Such is life at scale.
0: That's us, this society. We collectively are the tax man.
Thanks for the detailed and in-depth explanation - I was (and am) actually a citizen of a different country, but the company was American - so, the myriad of IRS rules about valid expenses and deductions was (and is) completely foreign to me. This was 20-years ago, so rules and regulations have probably changed. For example - they were ok with actual claims of even bottled alcohol purchases at the time. (One "old-hand" told me that for any yearly "offsite/internal conferences" that while those expenses would not be approved during the event, they were fine on your initial "travel-day", so other old-hands would stock-up, so that they could have parties with co-workers in their hotel rooms... "it was a different time" apparently...)
> For the most part, personal income is taxed on gross and business income is taxed on net
This bothers me a lot.
So basically a wealthy billionaire can take one company that makes profits and acquire a large loss making company that he also owns and Viola suddenly the profit making company doesn't need to pay as much in taxes anymore.
Or Google takes out huge ads on its own properties but it doesn't have to pay anyone and therefore doesn't have to pay any sales tax on those ads.
It feels like we are structurally encouraging vertical integration and bigger businesses.
We need to have some kind of alternative minimum global tax for companies based on gross receipts rather than net.
Taxing on net specifically reduces integration. Imagine if every business was taxed on 30% if their revenue. You would buy an iPhone for $1000 including $300 tax, and $700 to Apple. Apple pays $700 to Foxconn, who pays $210 tax and gets to use $490 to make the phone. But now imagine Apple buys Foxconn and makes it one company, now they keep $700 to make the phone with. Taxing on net fixes this.
It's not required for personal income because you can't conjoin yourself with your butcher to become one person.
Of course it is a personal benefit, you are literally benefitting by not spending your own post-tax dollars for something that goes into your stomach. However, there are legal rules that allow categorizing certain such expenses and amounts as a cost of doing business even though the manifest benefit is purely “personal”.
These rules have tightened up since the days of company cars and company houses “expensing” employee cars and houses as a tax advantaged form of compensation. If you try to do that now, that all shows up as “compensation” which is taxed. If you look at say Mark Zuckerberg’s yearly “salary” you will see that it is almost entirely non-monetary compensation for bodyguard services and “paying” for Mark Zuckerberg, the CEO, using the plane of Mark Zuckerberg, the person, and paying personal income taxes on that “compensation” even though Mark Zuckerberg was not paid any dollars (for that compensation).
The allocations you are provided and the manner in which you are allowed to spend them are generally considered “safe” from a accounting perspective. There is usually wiggle room above them if you are willing to more thoroughly document or finagle them, but that is extra accounting department cost to do things beyond the safe, well-trod legal path even if it is actually okay at the end of the day.
Please cite the de minimis threshold you are referencing. Here is a basic 67 page overview by the IRS on this topic [1] which does not indicate any uniform generally accepted de minimis threshold for arbitrary expenses, so you need to cite specific laws, regulations, case law, or generally accepted accounting advice to support your statement.
In the UK, if you are unlucky enough to get a payroll audit they go straight to reviewing expenses for things that should have been taxed, so yes you end up adding friction to the claimants to stop that happening.
Sure, but I don't see how this is significantly different than if I had gotten dinner at a restaurant. If I had bought food at a restaurant, and even if I got a dessert, that wouldn't have been questioned at all. For that matter, if I had gotten fixings at a grocery store to make sandwiches or something, that also wouldn't have been questioned. Every morning when I would drive to work on these trips I would buy a soda at a gas station, and that was never questioned, even after adding the receipt.
Fiber One bars have extra fiber, but ultimately they really are just glorified candy bars, not radically different than a dessert. I don't see how this was significantly than ordering a dessert at a restaurant.
Because the law is complicated and they were erring on the side of caution to stay within a relatively well-defined safe area to avoid committing tax fraud.
They did not spend hundreds of dollars in labor to save 5$. They spent hundreds of dollars in labor to avoid committing tax fraud while soothing your self-admitted petty ego.
If the government audited the company's tax records and disagreed that the fiber bars should've been expensed, they'd most likely charge tax, interest, and a penalty proportional to the $5 cost. Fraud requires intentional wrongdoing; no court or auditor is going to find that a company intentionally schemed to defraud the government of a couple dollars by sneaking fiber bars into a travel expense report.
It actually has more to do with how you would implement the controls. What can and cannot be allowed is complicated and requires someone to read and understand the regulations. That is probably more than you can expect from the person processing the actual returns. Normally a person who can understand the rules deseminates it into much simpler company policy, partly by discarding edge cases and things they don't think will apply to the company, and trains the actual operator on the common cases. This edge case was outside of that persons (or systems) normal parameters for operation, so it for rejected.
It is not that Finance rolled over, it is that it got escalated to a person who could understand the rules better, who advised the operator how to apply the rules in this case.
37 signals has a story about this, and the birth of policies & procedures that cost far more than the "crime" they're intended to prevent, because in your case it was $5 in granola bars, but that scenario will repeat itself for the rest of time, and extra resources will likely be dedicated to this "problem area". This seems inevitable as companies grow, and is one of the signals I use that it's close to my time to leave.
Didn't you have a specific per day expense budget? I think there is a department of labor guidance for local travel and a department of state guidance for international travel.
Usually, if your per day expense is less or equal to the guidance (where I work we do $90/day), no one cares. If you go above, you pay. The per day expense is for food. Alcohol cannot be claimed as an expense unless you are in sales.
Even in your short, simple comment I see 4? 5? (or more?) pieces of administrative policy that need to be policed, and then we need a process to handle these rules - and the edge cases (ex: what if I'm travelling with someone in sales but I'm the senior employee and we take a client out for dinner? only sales can expense alcohol but typically the most senior employee must pay), and the resubmission process, and the approve of exceptions process, and on it goes...
You’re complaining they didn’t want to expose themselves to legal risk with the IRS over a $5 bar. It didn’t cost them more to deal with this over just letting you expense it because they’re bad at economics. It cost them more to deal with this instead of letting you expense it because you were being a difficult employee who was demanding they bend the rules and expose themselves to risk over a $5 bar.
This maybe for travel expenses but it's the same story for so many things
1. Start with a mostly manual, people labor based, system that works well (handing Joann receipts)
2. It begins to not cost-scale well with growth (department size increases) or a salesmen comes around with a service that offers to do the same thing for less (Concur) or both
3. The company switches to reduce costs
4. The new service is cheaper partly because it offloads work onto employees (filling out travel expense forms) and by cheaping out on the experience (not caring that the forms are not easy to understand and the system is annoying to use)
5. Employees now have to spend time doing a task they never did and their experience is worse
And it stays in this state forever because the observable costs (service cost vs some number of Joann's) are less. The fact that expensive employees (A department full of Phd's) are now wasting time and being annoyed by this system are not seen. The hours used to fill out those forms and lost productivity due to anger are never accounted for. Also the higher ups are detached because they still have their own personal Joann's taking care of everything.
Why do you assume it is finance departments making these decisions?
Finance departments get hit with the same clueless 'cost saving' as everyone else! Often because the savings are so 'obvious' to MBA wielding middle managers, the decisions are made without Finance advice.
It is also often just a corporate politics thing. Your department has to save money, but there is no measure of how much money you cost other departments. In my experience this is more often done to Finance than by them. Pushing more work from frontline departments to back office departments sounds great to an Ops manager, and this frontline departments often contain people who are good at selling their idea.
I didn't even put in my last hotel bill, because my time was worth more to me than navigating a shitty, always borderline broken excel file that once filled out leads to a back and forth of clarifying questions always with an undercurrent of "them" trying to "teach me how to be a good form fill monkey".
If I should win the next pitch, I will definitely have on e of my team work on setting up a shadow system, a web application that produces pdfs for the finance department that are indistinguishable from the XLS based ones. But with a better CX for me and my people.
LLMs could be a good option to navigating this sludge. Fight fire with fire.
Another option is work smarter (not harder, because nothing I do is anywhere near “hard work”) to get into a position where you can tell them to get fucked. Don’t want to pay my hotel bill? Oh well, good luck finding someone else to rework your auth system. Call me back when the outsourced monkeys you hire end up putting you in the news for a security breach. But at least you saved a few hundred bucks on hotel fees, great job!
This is something management and executive positions do on a continuous basis - using their position and “prestige” to commend respect and bend the rules. But as an engineer with context of a critical system you often have more leverage, it’s just a matter of using it strategically (as engineers we initially start out playing the good game, but the thing is that everyone else is trying to fuck you - the challenge is learning to fuck back).
I keep a beginner’s Python book in reserve for those conflictual meetings where some idiot beancounter or manager has a problem with me. When I’m ready to walk (and at this point I have a very short fuse for obvious bad faith), I offer it to them as a tool to help them finish my job; not a single soul has yet to take me up on that offer. Some idiots suggested me the way to the door a few months later (offer gladly accepted, and replacement gig acquired) and watching from a distance it’s clear they would’ve been better off actually taking that book off me - either for themselves or the idiots they tried to hand my tasks to.
The only way to enact change is to actually make the noxious behaviour costly. If you take on the costs yourself there’s no reason for them not to persevere with their misguided strategy.
Seems like the article picked a poor example if the main point they are trying to get across was to minimize friction and optimize for momentum, because Concur consistently gave me the impression that it was optimized to increase friction.
Like, why does Concur have separate categories for long distance rail versus short distance rail? Why not put all travel expenses under a single "travel" category? Maybe there is some business reason why Concur expense reports are so nitty-gritty, but whatever the reason was, it was the opposite of minimizing friction.
I wouldn't be so sure the friction wasn't intentional. They are probably trying to cut costs, and by making the expense report process onerous, you will encourage people to expense things less, and therefore save money.
This is my general experience with IT. In a small company they are genuinely there to help you get your work done.
In a big company the relationship becomes adversarial. They're no longer there to help people get work done, they exist to prevent the company from the most incompetent employees.
I work at a university and I see that professors routinely try to sneak things by for travel reimbursement. We are stuck in the dark ages and most forms are paper and submitted manually. We are finally getting Concur later this year and am cautiously optimistic.
Similar for me in the corporate world, in the 80s, I just had to save the receipts and give the to the Department Admin. Easy as pie.
Then that all changed in the 90s. Everytime I traveled, using the 'canned' system provided to us, you could spend days trying to fill in the forms. It would ask you for all kind of codes no one knew to supply.
Multiply that by 10s of employees, there is no way firing a Dept admin and contracting that out saved any money. It has to cost the company 2x or 3x as much as one admin costs. And that is a low-ball estimate.
My experience has been that a hell of a lot of “automation” doesn’t automate much, but is used as an excuse to make people do work that didn’t used to be their job.
It gives upper management a dashboard into what's going on that they can see and manage. They get to watch more lines go up, which to them is well worth the added costs.
That reminds me of voicemail systems that are clearly engineered to confuse, demoralize and eventually hang up on folks. I had a major Canadian bank send me to something that simply didn't go anywhere, but took you around the merry go round for 40 mins before revealing it to be a black hole.
Sometimes it's hard to see the incentives, but once you do - it all makes sense. And often they're contrary to what you would assume would be the company's goal.
Agree, but your explanation stops short of the full explanation: because fraud appeared, people were not punished for it, so it grew until it mattered, so everyone was punished with bureaucracy. If fraud would be quickly and severely punished (by termination), it would be at a level close enough to zero to even ignore it. But I think companies think it is better to get lower paid employees with less ethics and save 10k while losing 1k to fraud, per employee.
Joann comes from a different era of work, when full service—with a smile—was the baseline expectation. Our banker is in her mid-60s and kind of the same way: we come to her with a request and she just takes care of everything.
In our current corporate hellscape, companies want to cut costs by cutting down service to the bare minimum necessary to function in compliance with all regulations. The line workers, being given menial, unrewarding tasks with an increasing amount of paperwork they are now responsible for, naturally respond by putting forth the barest amount of effort necessary and clocking out as early as they can get away with.
It's just ageism in the blog post nothing more. That bit of data was there to illustrate the manual nature of her approach, because old people do things manually and are not technical.
> If the goal isn't actively set to help and streamline the process
In the reimbursements example, the goal shifted, by design. The environment moved from high-trust to low-trust as the department grew, and the aim moved from "keeping people happy" to "spending less money"/"not being taken advantage of". Not defending it -- I hate paperwork like this -- but it seems almost inevitable as groups of any kind grow large enough and you actually can't assume good faith anymore.
It also depends on your legal system and how much discretion it allows managers. Let me give you an example: my startup used to allow people to expense a car rental when travelling to HQ in the Bay Area, which was in general cheaper than Ubering everywhere (a daily Corolla is cheaper than two Uber rides per day unless the hotel is extremely close to the office). Some people decided to abuse that, fly in on a Saturday, rent a rather expensive car, drive the whole day around, then expense all that.
After someone noticed this was happening, the CEO decided to forbid expensing car rentals, instead of having to come up with a very detailed policy. The thing is that in my home country, the abusers' managers would have been allowed to simply deny the reimbursement on discretion, on grounds that those joy rides were unreasonable, which would easily hold in court (where a plaintiff would be automatically forced to pay the defender's attorney fees too). But due to the highly litigious US legal system, a CEO can't allow that and companies must have extremely detailed policies, otherwise they risk very costly lawsuits where even if they win they'd lose a lot of money.
Your rental car example reminds me of my own "pizza dinner for the team" example. A company I used to work for would order pizza on Thursdays for folks who were working late. No paperwork, no expenses, no manager approval--at 7PM on Thursday, 5-6 boxes of pizza would show up in the break room, and people would spend a little more time at work hacking away. Win win. As the company grew, of course, people being idiots, the free pizza got abused. People would walk into the break room at 7:01, take an entire box, and leave the office. So, sure enough, free pizza night ended.
Because it's easier to just forbid than eat the cost or (heaven forbid!) talk to people.
How much was this pizza costing the company? Pennies in the grand scheme of things. How much were the rental cars costing? Pennies. Probably a rounding error in even the smallest department's budget. You can afford to hire an army of engineers making $100K each, but $10 pizza is where you draw the line? $100 rental cars? Really???
It’s not about the money, it’s about power and control.
Over the long term, yes. However, universities like Buffalo might have some peculiarities. They are overall run by the state government, and professors/students/staff are state employees. In addition, the money that pays their salary often comes from the federal government (NSF, DOE, NIH) which comes with their own restrictions and regulations beyond typical accounting practices.
So things like reimbursements are handled by a university trying to implement a state government's interpretation of both granting agencies desires and federal and state laws/regulations.
My university seems to be going crazy with rules lately. My hypothesis is that the state, and by extension the university, wants to button down everything so as not draw attention of the federal government (given who is in charge). It's taking already stressed professors (funding cuts, etc) and piling on more stress.
do you know anyone closely enough to ask and get an honest answer? in my experience, academics say this is all administrative bloat that has been increasing forever.
The level of trust didn't change at all, Joann must have read every single receipt as she filled out the forms. A fraudulent or out-of-policy expense would've been noticed either way.
High-trust doesn't mean absolute trust. Hand me a pile of receipts and I'll figure it out (probably with leeway in your favor) is much higher trust than uploading receipt, categorizing, adding explanations for exceptions, etc. One feels reasonable and still dignified. The other feels adversarial and paternalistic.
Joanne probably had to field some "sorry, this can't be expensed" situations, and/or those were reduced because people knew another human was doing the work and they'd get called out, trying to game/abuse the system was less or just naturally discouraged. That was high trust, by both the employee and by Joanne.
With the employees needing to use Concur directly, there's a tendency, since there's a diversity in how each employee will handle the specifics, to try to "save money" by denying reimbursements for any random violation, making sure all i's were dotted and t's crossed. The automated system itself encourages this because it's so low effort to deny and send the expense form back, potentially wearing down the employe that they just give up. Joanne could avoid all that at scale because there was little/no diversity in how expenses were handled. If an i needed to be dotted, she could handle it, and she knew all the i's that needed to be dotted across all expense reports.
I currently have someone to handle my expense reports who sits in front of Concur for me! And that person routinely asks me for specific detail without me having to mess with Concur at all, things like "who was at this dinner you gave me a receipt for" or "I can't find the receipt for this company card charge".
I work at an organization that uses concur. My team work at the other end of the process. They take Concur outputs and pay the claimants back. We find that somehow makes us the support department, adding users, training them, and worse still teaching them how to get around rejections. It is a bit less work for us than the paper forms I started my career with. It does rather push the overhead of claiming the expense onto the claimers though, many of which tend to be those whose time is most expensive. I'm not sure it works out.
This, the person nitpicking the Concur entries might as well have done Joanne's job and achieve two things at once. Compliance to concur and the regulatory compliance built into the concur process and not wasting everyone's time doing concur
I've seen adversarial approaches in small companies or even an individual boss and I've seen cooperative approaches in moderately large organizations.
The shift toward an adversarial approach in just about any organization is noticeable, in fact, in the US in the last 10-15 years but the US hasn't grown in size that much, large scale organizations existed much earlier.
I remember at a previous job I had to do a fair bit of business travel. The company had their own internal tool for filing expense reports.
I would do the typical thing of "take picture of receipt, upload receipt, specify how much it cost, etc.", and for the most part it was seemless and it would be sent to my bank account.
One time, I bought a box of Fiber One bars at a CVS Pharmacy and expensed that. I got a phone call from the billing department asking why I would expense something like that and I said something like "because I don't usually eat that healthy during business travel and I suspect you can guess the reason after that". They told me they would get back to me, and then I got an email telling me that they rejected the expense report and I would have to file it again to get the rest of my stuff reimbursed.
I can be a pretty petty dude, so I filed it again, completely unchanged, I get another phone call telling me to remove it, and this repeated two more times. Eventually I complained to my manager and he was able to get them to let me expense it and it all worked out.
I find it amusing, because the box of Fiber One bars was less than five bucks. I suspect all the time that they wasted of theirs and mine probably cost considerably more than the $5 would have saved from not covering it.
That is more likely a result of legal requirements. As a general rule any personal benefit you get counts as your income and is taxed accordingly. Expensing is not, instead counting as a business expense.
To avoid people just forming a personal company and declaring everything they spend a business expense and thus not taxed there are rules around what can be counted as a business expense.
If you instead want to take your salary in the form of Fiber One bars, but pay taxes on that spending in dollars, then your accounting department might have had fewer issues since they would not be mixing legally distinct costs and accidentally committing financial fraud.
Why is it a personal benefit? If I am onsite for 5-10 days, I am likely going to have 1-2 bars/day - especially if I am working a high-stress engagement where actually leaving the client site would have taken away my ability to execute to the required level of service.
At some point, policing what each employee eats and how they spend their maximum "per day/per diem" total allowance becomes a cost-drain.
I have been in orgs where some people were frugal and bought essentially groceries, so they could eat in their hotel room - some of that was dietary or health choices and restrictions. Eating restaurant food every single day for 3-meals/day is not a healthy choice (especially years ago when portion sizes were typically far too vast in some countries/regions). Then, in the same group - we had staff who would determine an average size meal - and then ensure that the tips they left would max-out to their daily maximum allowance, to "spread-the-wealth" so-to-speak.
Neither was fraudulent - we were allowed a daily max budget (it was not a per diem), we still had to submit receipts - heck, in our region if you wanted to spend your budget entirely on alcohol, there were (at the time) no red flags.
That's a non-compliant plan, I'm pretty sure. You can't just expense an all-alcohol trip to a bar because you're stressed. You're not personally in violation but the organization is violating the IRS rules for letting you do it. They'll get away with it usually, and if a tax auditor sees it there'll be modest fines unless it was systematic approach to dodge taxes.
As for "why" it's a personal benefit, that's just how we've decided as a society. We want people to pay tax on personal income irrespective of how it's spent and we want to allow businesses to pay tax on net income because to create economic value you sometimes have to spend a lot on inputs.
So we have rules for what income is taxed on gross and what income is taxed on net. For the most part, personal income is taxed on gross and business income is taxed on net. And then, to compensate for the gross taxation, a standard income deduction is offered.
Because of this difference between the way personal and business income are taxed, the classification of things into one and the other matters. A logical way for a company to restructure things given just the naïve implementation is to transfer all payment to payment in kind: the company buys your groceries, pays your rent, and so on. You love this, your taxes are lower and you still get the same benefit of the money. The IRS, therefore, qualifies what is personal and what is business. Your company cannot buy you your groceries and pretend they aren't paying you.
However, it is true that the company sometimes sends you on assignment where your costs would be higher than if you were to stay at home. In these cases, it is reasonable for them to pay for your expenses. Well, ideally, your company then always sends you on a one-day trip every month but sends you back with a Costco-haul. This would let them pay you more (you both win, the tax man[0] loses) so long as they appropriately redirect pay into in-kind. So the IRS says "you can either be careful or you can have a fixed amount for travel that works for these categories"[1].
So, "why" is it a personal benefit? It's because we have taxation, and because business and personal income are differently taxed, and because business spending has to therefore be defined. That's the broad strokes of it though there's nuance, and a lot of "well, actually" to get it out but that's the picture for the most part.
In the end, the lines have to be drawn somewhere. If you eat the office catering that's not a taxable benefit. But if you were to drive home to pick up and eat the Doordashed sandwich from the same place there and return to work, you would have eaten identical food and perhaps done identical work, but the treatment is different. Such is life at scale.
0: That's us, this society. We collectively are the tax man.
1: https://www.irs.gov/pub/irs-drop/n-25-54.pdf
Thanks for the detailed and in-depth explanation - I was (and am) actually a citizen of a different country, but the company was American - so, the myriad of IRS rules about valid expenses and deductions was (and is) completely foreign to me. This was 20-years ago, so rules and regulations have probably changed. For example - they were ok with actual claims of even bottled alcohol purchases at the time. (One "old-hand" told me that for any yearly "offsite/internal conferences" that while those expenses would not be approved during the event, they were fine on your initial "travel-day", so other old-hands would stock-up, so that they could have parties with co-workers in their hotel rooms... "it was a different time" apparently...)
> For the most part, personal income is taxed on gross and business income is taxed on net
This bothers me a lot.
So basically a wealthy billionaire can take one company that makes profits and acquire a large loss making company that he also owns and Viola suddenly the profit making company doesn't need to pay as much in taxes anymore.
Or Google takes out huge ads on its own properties but it doesn't have to pay anyone and therefore doesn't have to pay any sales tax on those ads.
It feels like we are structurally encouraging vertical integration and bigger businesses.
We need to have some kind of alternative minimum global tax for companies based on gross receipts rather than net.
Taxing on net specifically reduces integration. Imagine if every business was taxed on 30% if their revenue. You would buy an iPhone for $1000 including $300 tax, and $700 to Apple. Apple pays $700 to Foxconn, who pays $210 tax and gets to use $490 to make the phone. But now imagine Apple buys Foxconn and makes it one company, now they keep $700 to make the phone with. Taxing on net fixes this.
It's not required for personal income because you can't conjoin yourself with your butcher to become one person.
I don’t think you’ve thought through the downsides of doing it any other way. It’s not viable.
Of course it is a personal benefit, you are literally benefitting by not spending your own post-tax dollars for something that goes into your stomach. However, there are legal rules that allow categorizing certain such expenses and amounts as a cost of doing business even though the manifest benefit is purely “personal”.
These rules have tightened up since the days of company cars and company houses “expensing” employee cars and houses as a tax advantaged form of compensation. If you try to do that now, that all shows up as “compensation” which is taxed. If you look at say Mark Zuckerberg’s yearly “salary” you will see that it is almost entirely non-monetary compensation for bodyguard services and “paying” for Mark Zuckerberg, the CEO, using the plane of Mark Zuckerberg, the person, and paying personal income taxes on that “compensation” even though Mark Zuckerberg was not paid any dollars (for that compensation).
The allocations you are provided and the manner in which you are allowed to spend them are generally considered “safe” from a accounting perspective. There is usually wiggle room above them if you are willing to more thoroughly document or finagle them, but that is extra accounting department cost to do things beyond the safe, well-trod legal path even if it is actually okay at the end of the day.
None of which is relevant for a $5 box of fibre bars, which fall below the de minimis threshold.
Please cite the de minimis threshold you are referencing. Here is a basic 67 page overview by the IRS on this topic [1] which does not indicate any uniform generally accepted de minimis threshold for arbitrary expenses, so you need to cite specific laws, regulations, case law, or generally accepted accounting advice to support your statement.
[1] https://www.irs.gov/pub/irs-pdf/p5137.pdf
In the UK, if you are unlucky enough to get a payroll audit they go straight to reviewing expenses for things that should have been taxed, so yes you end up adding friction to the claimants to stop that happening.
Sure, but I don't see how this is significantly different than if I had gotten dinner at a restaurant. If I had bought food at a restaurant, and even if I got a dessert, that wouldn't have been questioned at all. For that matter, if I had gotten fixings at a grocery store to make sandwiches or something, that also wouldn't have been questioned. Every morning when I would drive to work on these trips I would buy a soda at a gas station, and that was never questioned, even after adding the receipt.
Fiber One bars have extra fiber, but ultimately they really are just glorified candy bars, not radically different than a dessert. I don't see how this was significantly than ordering a dessert at a restaurant.
Because the law is complicated and they were erring on the side of caution to stay within a relatively well-defined safe area to avoid committing tax fraud.
They did not spend hundreds of dollars in labor to save 5$. They spent hundreds of dollars in labor to avoid committing tax fraud while soothing your self-admitted petty ego.
If the government audited the company's tax records and disagreed that the fiber bars should've been expensed, they'd most likely charge tax, interest, and a penalty proportional to the $5 cost. Fraud requires intentional wrongdoing; no court or auditor is going to find that a company intentionally schemed to defraud the government of a couple dollars by sneaking fiber bars into a travel expense report.
We’ve all wasted a collective hundreds reading this thread but the only thing I can agree on is that fiber and hydration are essential for on-sites.
If that was true the OP's manager wouldn't have been able to fix it. If finance rolls over it cannot be a legal issue.
It actually has more to do with how you would implement the controls. What can and cannot be allowed is complicated and requires someone to read and understand the regulations. That is probably more than you can expect from the person processing the actual returns. Normally a person who can understand the rules deseminates it into much simpler company policy, partly by discarding edge cases and things they don't think will apply to the company, and trains the actual operator on the common cases. This edge case was outside of that persons (or systems) normal parameters for operation, so it for rejected.
It is not that Finance rolled over, it is that it got escalated to a person who could understand the rules better, who advised the operator how to apply the rules in this case.
Per diem is only a taxable benefit if it's not tracked and receipts aren't submitted.
37 signals has a story about this, and the birth of policies & procedures that cost far more than the "crime" they're intended to prevent, because in your case it was $5 in granola bars, but that scenario will repeat itself for the rest of time, and extra resources will likely be dedicated to this "problem area". This seems inevitable as companies grow, and is one of the signals I use that it's close to my time to leave.
Didn't you have a specific per day expense budget? I think there is a department of labor guidance for local travel and a department of state guidance for international travel.
Usually, if your per day expense is less or equal to the guidance (where I work we do $90/day), no one cares. If you go above, you pay. The per day expense is for food. Alcohol cannot be claimed as an expense unless you are in sales.
Even in your short, simple comment I see 4? 5? (or more?) pieces of administrative policy that need to be policed, and then we need a process to handle these rules - and the edge cases (ex: what if I'm travelling with someone in sales but I'm the senior employee and we take a client out for dinner? only sales can expense alcohol but typically the most senior employee must pay), and the resubmission process, and the approve of exceptions process, and on it goes...
There was a limit but I wasn't allowed to just buy anything I wanted. I think I got up to $100 a day (not counting hotel).
I didn't expense alcohol.
You’re complaining they didn’t want to expose themselves to legal risk with the IRS over a $5 bar. It didn’t cost them more to deal with this over just letting you expense it because they’re bad at economics. It cost them more to deal with this instead of letting you expense it because you were being a difficult employee who was demanding they bend the rules and expose themselves to risk over a $5 bar.
This maybe for travel expenses but it's the same story for so many things
1. Start with a mostly manual, people labor based, system that works well (handing Joann receipts) 2. It begins to not cost-scale well with growth (department size increases) or a salesmen comes around with a service that offers to do the same thing for less (Concur) or both 3. The company switches to reduce costs 4. The new service is cheaper partly because it offloads work onto employees (filling out travel expense forms) and by cheaping out on the experience (not caring that the forms are not easy to understand and the system is annoying to use) 5. Employees now have to spend time doing a task they never did and their experience is worse
And it stays in this state forever because the observable costs (service cost vs some number of Joann's) are less. The fact that expensive employees (A department full of Phd's) are now wasting time and being annoyed by this system are not seen. The hours used to fill out those forms and lost productivity due to anger are never accounted for. Also the higher ups are detached because they still have their own personal Joann's taking care of everything.
I always say, that finance departments can easily calculate costs. But opportunity costs most of the time don't make it into the books.
Why do you assume it is finance departments making these decisions?
Finance departments get hit with the same clueless 'cost saving' as everyone else! Often because the savings are so 'obvious' to MBA wielding middle managers, the decisions are made without Finance advice.
It is also often just a corporate politics thing. Your department has to save money, but there is no measure of how much money you cost other departments. In my experience this is more often done to Finance than by them. Pushing more work from frontline departments to back office departments sounds great to an Ops manager, and this frontline departments often contain people who are good at selling their idea.
I didn't even put in my last hotel bill, because my time was worth more to me than navigating a shitty, always borderline broken excel file that once filled out leads to a back and forth of clarifying questions always with an undercurrent of "them" trying to "teach me how to be a good form fill monkey".
If I should win the next pitch, I will definitely have on e of my team work on setting up a shadow system, a web application that produces pdfs for the finance department that are indistinguishable from the XLS based ones. But with a better CX for me and my people.
LLMs could be a good option to navigating this sludge. Fight fire with fire.
Another option is work smarter (not harder, because nothing I do is anywhere near “hard work”) to get into a position where you can tell them to get fucked. Don’t want to pay my hotel bill? Oh well, good luck finding someone else to rework your auth system. Call me back when the outsourced monkeys you hire end up putting you in the news for a security breach. But at least you saved a few hundred bucks on hotel fees, great job!
This is something management and executive positions do on a continuous basis - using their position and “prestige” to commend respect and bend the rules. But as an engineer with context of a critical system you often have more leverage, it’s just a matter of using it strategically (as engineers we initially start out playing the good game, but the thing is that everyone else is trying to fuck you - the challenge is learning to fuck back).
I keep a beginner’s Python book in reserve for those conflictual meetings where some idiot beancounter or manager has a problem with me. When I’m ready to walk (and at this point I have a very short fuse for obvious bad faith), I offer it to them as a tool to help them finish my job; not a single soul has yet to take me up on that offer. Some idiots suggested me the way to the door a few months later (offer gladly accepted, and replacement gig acquired) and watching from a distance it’s clear they would’ve been better off actually taking that book off me - either for themselves or the idiots they tried to hand my tasks to.
The only way to enact change is to actually make the noxious behaviour costly. If you take on the costs yourself there’s no reason for them not to persevere with their misguided strategy.
That was spot-on.
All too true, and I never actually thought about it, in that way.
I know that it's controversial, but it's my opinion that LLMs could be trained to be Joannes, instead of auditors (the bad guys, on Discworld).
That could be good.
Humans seem to get caught up in mustache-twirling exercises, when they are given any kind of power or authority. Machines could care less.
But also, auditors could program LLMs to be mega-auditors.
That would be bad.
Right now, LLMs are training us to be auditors.
Seems like the article picked a poor example if the main point they are trying to get across was to minimize friction and optimize for momentum, because Concur consistently gave me the impression that it was optimized to increase friction.
Like, why does Concur have separate categories for long distance rail versus short distance rail? Why not put all travel expenses under a single "travel" category? Maybe there is some business reason why Concur expense reports are so nitty-gritty, but whatever the reason was, it was the opposite of minimizing friction.
That’s the point.
I wouldn't be so sure the friction wasn't intentional. They are probably trying to cut costs, and by making the expense report process onerous, you will encourage people to expense things less, and therefore save money.
This is my general experience with IT. In a small company they are genuinely there to help you get your work done.
In a big company the relationship becomes adversarial. They're no longer there to help people get work done, they exist to prevent the company from the most incompetent employees.
I work at a university and I see that professors routinely try to sneak things by for travel reimbursement. We are stuck in the dark ages and most forms are paper and submitted manually. We are finally getting Concur later this year and am cautiously optimistic.
Concur is the worst.
>forcing us to file our own travel reimbursement
Similar for me in the corporate world, in the 80s, I just had to save the receipts and give the to the Department Admin. Easy as pie.
Then that all changed in the 90s. Everytime I traveled, using the 'canned' system provided to us, you could spend days trying to fill in the forms. It would ask you for all kind of codes no one knew to supply.
Multiply that by 10s of employees, there is no way firing a Dept admin and contracting that out saved any money. It has to cost the company 2x or 3x as much as one admin costs. And that is a low-ball estimate.
My experience has been that a hell of a lot of “automation” doesn’t automate much, but is used as an excuse to make people do work that didn’t used to be their job.
It gives upper management a dashboard into what's going on that they can see and manage. They get to watch more lines go up, which to them is well worth the added costs.
That reminds me of voicemail systems that are clearly engineered to confuse, demoralize and eventually hang up on folks. I had a major Canadian bank send me to something that simply didn't go anywhere, but took you around the merry go round for 40 mins before revealing it to be a black hole.
Sometimes it's hard to see the incentives, but once you do - it all makes sense. And often they're contrary to what you would assume would be the company's goal.
Presumably this shift happened due to another F word -- Fraud.
Agree, but your explanation stops short of the full explanation: because fraud appeared, people were not punished for it, so it grew until it mattered, so everyone was punished with bureaucracy. If fraud would be quickly and severely punished (by termination), it would be at a level close enough to zero to even ignore it. But I think companies think it is better to get lower paid employees with less ethics and save 10k while losing 1k to fraud, per employee.
> due to another F word -- Fraud.
My guess is the R word —- Retirement.
>> Joann, who was over 60
Just to ensure you know that Joan was not technical, because old.
Well, also to explain why she wasn't there after a time.
Joann comes from a different era of work, when full service—with a smile—was the baseline expectation. Our banker is in her mid-60s and kind of the same way: we come to her with a request and she just takes care of everything.
In our current corporate hellscape, companies want to cut costs by cutting down service to the bare minimum necessary to function in compliance with all regulations. The line workers, being given menial, unrewarding tasks with an increasing amount of paperwork they are now responsible for, naturally respond by putting forth the barest amount of effort necessary and clocking out as early as they can get away with.
It's just ageism in the blog post nothing more. That bit of data was there to illustrate the manual nature of her approach, because old people do things manually and are not technical.