UK businesses are paying £1m a day for personal phone calls, damaging profitability and causing companies to inadvertently contravene tax regulations.
Research released by Aurora Kendrick James, a telecom expense management specialist, shows that workers make around £400m worth of calls every year to friends and family on company mobile phones, with the bills paid by their employer.
Yet many businesses reclaim VAT on the total mobile phone bill, rather than just the business element, as they are supposed to. Up to £150k could be being incorrectly claimed from the Exchequer every day.
Based on the analysis over 10 years of telecommunications spending patterns and in the UK, Aurora Kendrick James believes that personal calls account for between 20% and 25% of all calls made on company mobiles.
According to Jeremy Green, principle analyst at Ovum, the UK's three million plus corporate mobile phones together have an annual bill of some £1.7bn – of which personal calls account for between £340m and £425m.
According to Aurora Kendrick James, few businesses actively monitor and manage personal usage, which means they are losing control of the cost and usage of a tool that should be delivering improved communication and productivity for its workers.
Matt Atkinson, managing director at Aurora Kendrick James stresses the importance of establishing a company policy with clear guidelines on the appropriate usage of business mobile phones. He has highlighted four simple steps to improve efficiency, cut business costs and reduce fraud:
1. Review and analyse: assess the company's mobile estate and determine the potential cost to the business.
2. Collate and log: create an accurate inventory of users against which costs and usage can be monitored.
3. Control and guidance: agree a fair company usage policy and decide whether the aim is to control and reduce personal usage or actually reclaim costs from users.
4. Educate and publish: educate users on their mobile usage and costs, and reinforce the policy with monthly usage statements.
Aurora Kendrick James estimates that businesses can often save more than £80 per annum per user through implementing a structured mobile expense management program.
"Education and visibility of costs to users are pivotal in successful mobile expense management,” says Atkinson.
“By having a company policy in place and introducing employees to it, staff can be made accountable for their costs against sensible guidelines.
“Implementing a mobile expense management policy will control and reduce personal usage, and will also help with VAT compliance, validating invoices, tariff negotiation, management and inventory reporting, all of which will mean a more cost-effective and controlled mobile estate."
