Businesses can’t do without expense policies. They are supposed to be a simple set of rules to guide spending but often become a cause for confusion and inefficiency.
Your employees should know what they can spend on, how much, and how often. Yet, assimilating the expense guidelines for countless day-to-day expenses and departments turns into a headache.
Here are some valuable best practices to ensure your expense guidelines are effectively implemented and followed.
Let’s start with the most immediate step you can take.
Conduct an Audit
Businesses pay for several resources or services to run their operations. However, many of them might be on autopilot and even forgotten by the users. As a result, you might be paying for underutilized or outdated technologies or reimbursing for tasks that contribute no value.
A comprehensive audit will let you zero in on the necessary expenses. Getting an idea of what you are paying for and where your budget is going is essential to streamline your expense policies and make them more effective.
Issue Pre-Approvals to Boost Productivity
Getting approval for an expense or reimbursement takes a painfully long time for most organizations. In the UK, a company usually takes 9 days to process an expense claim. Naturally, this makes your employees suffer and even holds up your operations.
Let’s say your content department needs to subscribe to editing software. All their work would be hold up for as many days as you need to approve their claim.
Pre-approving regular and expected expenses is a great way to reduce your processing time. You can set the categories and budget for expenses that you are going to make for sure.
Additionally, your employees also don’t have to ask for permission whenever they need to pay for something.
Best of all, you won’t be bombarded with claims at the end of the month that are unexpected. Every cent you spend will be driven by strategic decisions and evaluation.
Make Sure Your Expense Policies are Read
2/3rd of employees don’t even care to read their company’s expense guidelines. However, you can’t always blame them as a boring, pages-long document with complex propositions might put anyone off.
Additionally, it is seen that many employees, especially in small companies, don’t read internal policy documents.
You cannot implement your expense policies unless it is communicated well. Here are a few tips for communicating your guidelines without fail:
- Keep your policy simple and concise
- Give specific numbers rather than issuing broad terms
- Mention expense categories
- Make your document visually appealing
- Make your expense policy readily available
Using digital spend management software can help you ensure your policy is read. You can forward the document to your employee’s mobiles and have it hosted on a central repository for real-time access.
Additionally, you can customize your software to include a chatbot that guides employees to make and claim expenses. They can access the policy as a database and get instant information about what’s allowed and what’s not.
Eliminating Fraud and Errors
Not all employees are honest while claiming expenses. A fraudster claims an average of $2,448 every year from his company, resulting in a loss of $2.8 billion annually for US employers.
Additionally, businesses have to deal with erroneous claims where the numbers are inaccurate.
Collecting receipts is an ideal way to make sure you are reimbursing legit expenses. However, the process of submitting and approving paper receipts is not very efficient. Paper receipts also leave room for frauds that are not likely to be discovered by the finance department.
Businesses now entertain e-receipts or electronic receipts to reimburse expenses. Employees can easily forward e-receipts via email or messaging apps to back up claims. If you use spend management software, you can automatically collect data from paper receipts using a mobile device.
Moving to a paperless process will reduce fraud and improve the accuracy of claims. You will end up saving thousands of dollars by not entertaining even the cleverest scam from your dishonest employees.
Do Away with Multi-Approval Structure
Generally, a single authority is not in charge of approving claims. You have several people in the finance or scattered around departments responsible for handling reimbursements or approvals.
Naturally, too many cooks spoil the broth. Your employees might also get confused about whom to approach in case they want to purchase something.
Set up a claim command center through which you route all approvals and reimbursements. It does not have to be a single person; a team can also collaborate to handle expenses.
Using digital expense management tools is ideal for running an efficient command center. You can view, entertain, and approve requests and claims in real-time to save time and money. All your expenses and reimbursements are centralized into a single platform for greater visibility.
Things will run much faster, and your employees can spend more confidently without violating your expense guidelines.
Your policies should apply to all employees without any exceptions. You don’t want to treat anyone with bias, which will lead to unhappy staff and loss of productivity.
It may do good to get feedback from the people who actually buy and spend the money. Your employees can help you create a fair policy that everyone accepts and implements willingly.
Additionally, be sure to track all expenses and claims and leave nothing to guesswork.
Your expense policies should be a living and breathing document that changes with your business requirements and objectives. Communicating your guidelines and weeding out inaccuracies will go a long way to streamline your claims and allow only legit expenses. Switching to spend management software can centralize your expenses and help you save cost and time. Fraud claims are also likely to go down while you experience an improvement in data accuracy.
Best of all, your policies will be readily accessible, 24/7, so that your employees are never confused again. Start with an audit of your current claims and expenses to set the foundation for better management.