Mobile Phone Payments open billion pound black hole - by John Stockdyk

Mobile phones are proving to be a considerable drain on company finances and new mobile payment options are likely to push the excess costs "off the Richter scale" according to mobile expense management company, ttMobiles.

According to ttMobiles research, personal use typically accounts for 30% of mobile expenditure at a cost to UK companies of £990 million a year. An audit of one major construction company found that 2.835 out of 9,000 mobiles paid for by the company were unused or in the hands of ex-employees.

Mark Chapman, commercial director of ttMobiles, commented: "Without lifting a trowel, this company could save £100,00 in line rental immediately, in addition to the asset value of the phones at £170,000. An easy £270,000 saving that can be delivered straight to the profit line."

Construction is an extreme case, as many contractors are given mobiles when they begin a job - and hold on to it as they move on to other projects, leaving the original company to pay the rental.

But current losses are likely to be dwarfed as mobile users embrace new options to pay for products and services using their mobile phones.

Chapman explained, "Companies like M-Pay will revolutionise the way we use our mobiles. Soon we will be using them to pay for all sorts of products and services, from buying a can of Coke to paying taxis, buses, trains, to cinema tickets and home deliveries."

M-Pay effectively turns the mobile phone into a payment instrument and can be used to register payments with vending machines, parking meters, ticket machines, video games and public internet terminals. Other mobile payment services include a mobile ticketing system being developed by Chiltern railways and Paypal's text 2 Buy where you text the number in an advertisement to buy the goods or service.

Chapman added that you can also now text your Sky box to record a TV programme, and British Airways can text you flight departure details.

"The market for mobile payment is forecast to hit $36 billion globally in the next two years," said Chapman. "The next phase will include more products and services charged straight to your mobile - just the same as with a credit card."

"But business should beware. These costs will befinding their way onto the company phone bill and based on our experience of personal calls and trends in Japan, mobile expenditure could be costing business in excess of £1 billion in the next few years."

Personal use and other mobile expenditures also raise a tax issue, as companies are only allowed to claim back the VAT on goods and services that are purchased solely for business use. According to ttMobiles, HMRC has been challenging businesses that reclaim VAT on all their mobile expenditures and has in many cases queried the methodology behond companies' mobile apportionment calculations.

As might be expected for a company specialising in mobile audit services, Chapman commented "This trend towards paying by mobiles makes it vital for companies to keep track of their mobiles, how they are used and how much they cost.