What it means
Smartphones put computing power in every pocket, which has reshaped how companies sell, communicate and operate. Employees use them for email, approvals, expense claims and video calls, while customers use them for shopping, banking and payments.
A business that ignores the mobile experience risks losing a large share of its audience. For finance teams, the main questions are cost and control.
The device itself is a purchase that can be capitalised and depreciated, or leased, and there are monthly charges for calls, data and software. Policies must decide whether the company buys the phones or allows staff to use their own, an approach often called bring your own device.
Security is a central concern. A lost phone can expose company email, customer data and banking apps, so businesses use mobile device management software to enforce passcodes, encrypt data and wipe devices remotely.
These tools carry a licence cost that belongs in the total budget. Smartphones also create new revenue and payment channels.
Mobile wallets and card readers let small firms take payments anywhere, and apps allow customers to order, book and manage accounts. Mobile commerce now makes up a large share of online sales in many markets, so conversion on a phone screen directly affects revenue.
Expense and tax treatment vary. Some places treat a company phone used partly for personal calls as a taxable benefit, and others allow staff to claim a share of their own plan.
Finance teams should agree the rules with their tax adviser and write them into policy. Planning replacement is part of managing the cost.
Phones are usually kept for two to four years before the battery, software support or performance becomes a problem. Staggering renewals smooths the spending and avoids a large bill in one year, and it keeps a supply of spare handsets for urgent replacements.
In practice
Real-world examples.
Example
A building firm gives site managers company smartphones so that they can photograph progress and approve invoices on the spot. The finance team notes the cost per phone and sets a replacement cycle of three years. Faster approvals on site also shorten the time to pay suppliers.
Example
A market stall owner takes card payments through a small reader attached to her phone. Her takings rise because customers no longer need cash. She records the reader fee as a cost of sales. At the end of the month she compares card takings with the bank statement to make sure nothing is missed.
Example
A sales company allows staff to use their own phones in return for a monthly allowance of $40. It installs security software on each one. This cuts the capital cost but requires a clear policy on data and privacy. Staff also agree that the company can wipe business data if a phone is lost.
Formula
Calculation
Annual cost per phone = (device price / years of use) + yearly service plan + yearly management software
Suppose a company buys a phone for $900 and keeps it for three years, so the device cost is 900 / 3 = $300 a year. The service plan costs $50 a month, or 50 x 12 = $600 a year, and management software costs $60 a year. The annual cost per phone is 300 + 600 + 60 = $960. For 50 employees the annual cost is 50 x 960 = $48,000.Case study
Seen in the real world.
Greenfield Couriers is an illustrative, fictional delivery company with 120 drivers. It issued smartphones to every driver for route updates and proof of delivery, at an annual cost of $1,000 per phone, or $120,000 in total.
The finance manager compared this with the benefits. Digital proof of delivery cut disputed deliveries by half, saving about $90,000 a year in credits, and better routing saved $60,000 in fuel.
The net benefit was $30,000 a year, plus faster invoicing. The illustrative lesson is that a smartphone programme should be judged on the savings it creates as well as on the bill it adds. Greenfield now reviews the numbers every year before renewing the contract with its mobile provider.
Watch out
Common mistakes.
- Budgeting only for the handset and forgetting the service plan, software, insurance and replacement.
- Allowing staff to access company data on personal phones without any security controls.
- Overlooking the tax treatment of personal use of a company phone.
Questions
People also ask.
Should a company buy phones or let staff use their own?
Buying gives more control and security, while a personal-device policy reduces capital cost but needs clear rules and an allowance.
How long should a company keep a smartphone?
Two to four years is common, depending on how the device is used and when software support ends.
Are smartphones a capital expense?
A higher-priced device may be capitalised and depreciated under a company's policy, while low-cost devices are often expensed immediately.
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