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Mar 8, 2023
6 mins read
Workspace Spend Management
As companies increasingly move to hybrid work or remote work office environments, the more finance departments will be managing expenses related to coworking spaces. As companies used to haphazardly navigate employee travel expenses, juggling various expense reports and receipt scans until more digitized and streamlined services became available, so are companies who offer coworking space benefits or reimbursement to their employees.
Prior to the COVID-19 pandemic, on-demand coworking spaces were often used only by freelancers or start-ups who couldn’t afford office space. But now, they are becoming a viable resource for full-time remote work and hybrid work employees who need an office space outside of their homes.
Let’s get a better understanding of workspace spend management, what the concept is based on, and why it’s important for companies to get ahead of it, especially those with hybrid work or remote work policies.
The term “workspace spend management” can be defined as a way to manage budgets and spend for any expenses related to the on-demand of workspaces. Typically, these are related to coworking spaces, but this could also potentially include conference rooms, meeting spaces, and hotels that are being utilized for conferences or meetings.
Read more: What you need to know about flexible workspace spend management
As mentioned earlier, companies are actually familiar with this concept as it relates to company travel. Previously, finance departments needed to track the expenses of their traveling employees, which was quite problematic. Paper had been the only way to track the expenses related to flights, rental cars, and accommodations, as well as meals and per diems. Eventually, this practice, both the planning and the tracking, became digitized, and got its own name: travel and expense (T&E)
Prior to the pandemic, coworking spaces were being used on an infrequent basis, either by individual freelancers, or by smaller companies who couldn’t afford an office space. But now, with the new trend of distributed and remote workforces, and many companies completely closing their offices (like GitHub, most recently), this has opened the floodgates for on-demand collaborative coworking spaces, being offered as a benefit to remote work and hybrid work employees.
With this sudden surge comes the challenge of managing all the requests for coworking spaces (for meetings, conferences, or just daily work), as well as the budgets and employee reimbursement, creating the need for a system, similar to travel, that can manage it all.
Similar to travel expense management, workspace spend is managed by the finance department. Currently, many companies do not have a specific coworking space budget allotted, and are, in some ways, working backward; they’re getting the receipts and expense reports, then trying to create a budget based on numbers that aren’t entirely accurate. If employees are submitting expenses over the course of a few months, it’s difficult to get the actual budget and an accurate forecast. And, employees might not necessarily understand how to categorize a new expense like coworking spaces, so the finance department is tracking down these related expenses and discovering they’ve been paid incorrectly.
The number of companies closing their office spaces completely or just keeping a company headquarters is rapidly growing. With so many remote work employees, there’s been an increase in the use of coworking spaces, many of which, due to the great number of benefits of coworking spaces, are reimbursable expenses for the employee.
Finance teams are inevitably going to see an increase in expenses related to on-demand coworking spaces, and without a system in place to help manage the budget, tracking of these potentially large expenses is extremely difficult and time-consuming.
To circumvent these potential issues, like employees forgetting to file expense reports, or not filing them on time, or filing them incorrectly due to a misunderstanding of how these types of expenses are categorized, workspace spend management becomes increasingly important for the company’s bottom line. Prior to the pandemic, a company’s coworking spend might have been too small to notice. But as the remote workforce increases, workspace spend management is going to become an important way for companies to get ahead of their budgets and keep track of this important remote work employee benefit.