Handling your staff expenses can be challenging, cumbersome, time-consuming, and a hassle for the finance team. But fortunately, there are ways to make this method less of a drag. Controlling staff spending is a matter of strategy. Plus, when it comes to corporate expenses, you have three major requirements.
- To examine and control the organization’s operational costs
- To gather all invoices and supporting contracts
- To conduct analytical accounting of expenditures
If you perform these three correctly, you are at a fast pace on your way to a healthy spending culture- something that every business wants. So, what is the best way to monitor and control your staff expenses? How can you provide your staff with the flexibility they require to get out into the world when ensuring the security and integrity of business funds?
Here is what you should keep in mind.
- Generate Business Expense Policy
The worst way to handle business spending is to barely manage it at all. It is quite typical of small business organizations. Firstly, you feel you don’t require a strategy, while the amounts you spend are less. The CEO or manager handles all the money.
But here we will discuss how to help you control staff spending. At some point in time, you should free your team to do great work. This will need access to funds. But how your employees should spend, on what, and how much are they allowed to spend- all will be included in your well-written travel and expense policy.
Here are some basic principles that you should keep in mind.
- Make it easy, clear, and concise.
- No need to list every single expense. Guidelines are better than a long list.
- Do not jot down the academic or legal papers. Instead, keep it more friendly.
- Stop including examples of good and lousy organization spending.
- Include other team members in the process. Good spending policies make sense to the entire organization.
- Set a Budget for Every Expense Category
One way to handle employee expenses is to deploy a detailed travel and expense policy. It includes a maximum budget for every expense category in advance, such as hotel stays, buying of supplies/equipment, restaurant bills, business trips, and so much more.
At every expense, you must define how much each staff can incur and let them understand that they will not be reimbursed beyond that certain limit. Some types of expense may be pre-approved, whereas anything outside this will need explicit approval for managers.
Expense policies work the best when they are precise, simple, and that staff can remember easily. And this is entirely achievable.
- Keep Clear Spend Procedures in Place
Once the policy is ready, you must tackle the processes. Corporate spending includes more than just setting up a budget or providing your team members the funds. By following the expense management procedure, which is thorough and methodical, you can incentivize staff to control their expenditure. A simple and detailed method can be helpful for management as well as employees.
While implementing an expense management method, make sure to search for ways to make it as fast and straightforward as possible for staff to follow. For instance, you must provide staff with pre-filled forms, including automatic prompts for essential supporting documentation.
Even better, modern expense management solution such as SutiExpense walk your teammates through the entire spending method-from approval, to payment and receipt. This approach is the best-case scenario where your team members have no choice but to follow the rules and regulations, even if they are unaware of them.
- Offer Suitable Payment Processes
If you genuinely want to be effective in controlling staff expenses, the best way to do so is to provide your employees with a simple payment process. This is where corporate expense cards come in. With these expense cards, you can quickly load them with a specific amount in advance so that it can be used for a wide range of expenses incurred in the field like hotels, restaurants, and much more.
These business cards combine security with flexibility. Staff can spend just like they have their business card. But the finance department and managers can set a specific limit for every card and check precisely where the staff has spent at any time.
Next comes a virtual credit card into the picture. It is a perfect solution for online expenses, like booking a hotel room or a vehicle, purchasing plane or train tickets, and much more. Also, they are ideal for digital advertising and software subscriptions.
The single-use card can be utilized according to staff requirements and controlled in real-time via a secure internet platform. It gives for a precise and detailed oversight while allowing staff to make online purchases conveniently and fast.
Do you know what is not a good option? Forking over the business credit card each time staff needs to make a payment. This is a hassle, but it also exposes your organization to the risk of credit card fraud.
- Monitor Expense Report Fraud
Today, there are higher chances of expense report fraud than you think. A whopping 87% of staff admit to lying on expense claims, and more than 15% submit false information all the time.
These don’t all have to be malicious falsehoods. At times, people make up details that they think are real because they no longer have the details they require. But fraudulent activities are something to worry about, especially for the financial controllers and their team members. Your work is to keep the organization money safe.
The most efficient way to avoid this is to get rid of expense reports. After all, nobody likes dealing with expense reports anyhow. Given that they are time-consuming and quite easy to falsify, it would be wise to do away with them and opt instead for agile and flexible payment solutions.
- Digitize Invoice Retrieval
When a staff pays for something, they must keep the receipt. This is a simple concept but leads to endless issues for accounting and finance departments. No matter how diligent your team members are, they will forget and misplace receipts from time to time. It then involves lots of back and forth works for the finance department, to explain themselves and find the proofs of payment.
To prevent wasting time gathering invoices, and ensure that you receive all of them, you must digitize receipt collection. Electronic receipts are now accepted by tax offices all over the world.
The most natural process is a receipt scanning app. The staff pays for something, then instantly takes a snapshot of the receipt the moment they get it. Hence, there is no data entry for the finance department, and the number of misplaced/lost receipts becomes negligible as well.
- Record Keeping
The days of keeping business records on paper filed away in cabinets have become antiquated. With technological advances and electronic means, it has become easier to monitor organization records electronically instead of paper.
It is a great idea to perform an internal audit of your organization records. Doing so will provide you the insight on how well the business has been monitoring accounting records. It is essential because if you’re audited by a state taxing agency or IRS and missing business records, your company can be penalized for claiming expenses and deductions, which cannot be substantiated. In their eyes, it would be considered as an overstatement of deductions that will result in penalties. One such penalty would be the accuracy-related penalty.
Hence, one way to prevent the risk of misplaced documents is by going paperless- generating a digital library of receipts, searching, and retrieving documents when required. The IRS accepts digital copies of your receipts. With the advancement of smart devices, it is easy for staff to leverage a scanning app to digitize receipts. This eliminates the need to have to attach paper receipts to expense reports that can, at times, be quite cumbersome.
- Understand the Financial Health of Your Business
An organization needs to know how expenses impact the bottom line. For this, you must be able to understand the business’s financial health better.
For small enterprises, almost one-third of the annual revenue is spent on travel itself. The expense report enables you to put the brakes on or keep staff expenditures within reasonable limits.
To Sum Up
Handling staff expenses is about searching for the right balance between agility and control so that everyone’s interests can be served well. Your team members need to be able to perform their tasks with convenience and flexibility. You need to be able to have a detailed and clear oversight over your business spending. The surest way to regulate employee expenses is to provide your staff ownership. If they respect and trust your organization, they are likely to abide by a clear expense method. So, staying on top of staff expenses is not an option; it is a must.