When starting a business, it’s hard to imagine that one day your employees’ business spending might get out of control. Many smaller companies are still under the impression that their CEO or CFO can check every single expense and can keep doing this while growing. This is, of course, madness. It would take up way too much time, especially when it’s someone who is that vital to the business. Also, employees would have to wait too long for their expenses to be processed.
Even larger, more settled companies don’t always have their employee spending under control. Employees lose receipts, in part still work with paper expense reports and in part with digital ones, giving the finance department a headache. What’s worse is when they don’t know which expenses are allowed to be made or what the budget is.
The bottom line? Every company, no matter how big or small, needs to control their employee spending somehow. Below we share five ways in which you can make that happen.
1. Digitize and automate your expense process
Digitizing and automating your expense claim process basically entails getting rid of Excel sheets and paper receipts and having your employees do everything digitally. So when they get a receipt or invoice for office supplies that they purchased for instance, they simply take a picture of it and upload it to the expense solution. The data extraction technology (OCR) automatically recognizes the information on the document and sends it to the online dashboard, where it’s ready to get approved by a manager. After approval, the data is sent to your company’s accounting software, where the transaction is handled. Easy as pie, right?
The benefits of digitizing and automating your expense management are close to endless, but we will name nine that will help you get your employee spending under control. Read more about how automation benefits organizations in this blog.
- No more Excel forms or paper receipts that need physical handing in (Corona proof!)
- Fewer errors: employees simply take a picture of their receipt, the software automatically extracts the information and sends it to a user-friendly portal.
- Time and cost-effective accounting process: All receipts and invoices are processed with text recognition software (OCR), which leads to a cost reduction of up to 70%.
- More efficient authorization with digital workflows.
- Compliance-proof approval process with audit trails: Business rules determine whether certain expenses are approved or rejected automatically.
- Automatic detection of duplicates/fraud
- Google Maps integration: no more manual travel calculations
- Insightful dashboards with expense behavior
- Maximize VAT returns: If employers do reimburse costs without a receipt, this means they cannot deduct VAT.
Expense management platforms are built to improve the submission process but also to automatically enforce expense policies. Which brings us to the following piece of advice that will help you get in control of your spending.
2. Create a spending policy
How are employees supposed to spend company money and what is their budget? Things like these shouldn’t be unclear to staff, because who knows what kind of expense claims you’ll get?
Answers should be documented in your expense policy, so employees know exactly what’s expected of them. Clear boundaries will help you keep spending under control and avoid discussions. Not unimportantly, an expense policy will make it easier for your finance department to make expense forecasts.
Here are a few things you should pay attention to:
- A spending policy should be simple, clear, and concise
- It’s a good idea to include examples of preferred spending behavior
- Don’t boss people around: explain the rules in a friendly way
- Write guidelines, don’t make long lists
- Include employees in the process of creating a handbook, because good spending policies should make sense to the entire company, not just management
- Make sure the handbook is communicated to employees and easy to find in case they want to revisit it
- Always update your handbook, because as the world changes, so should your policy
If you need to set up your own policy and you are looking for an expense policy template, then have a look at the blog we wrote about that.
3. Set a budget for each category
Part of getting in control of employee spending is setting budgets for all categories: plane tickets, hotels, restaurants, courses, equipment and supplies, etc. For all expenses, you should define how much each employee is allowed to spend and tell them that they will not be reimbursed when they exceed their budget. There can also be cases in which you want employees to ask for approval before spending. This should also be included in your policy handbook.
Make sure your policy makes sense to everyone, so that it’s easier for them to remember and stick to the rules. This means not making a load of exceptions and being consistent when implementing your policy.
4. Monitor subscriptions centrally
Keeping on top of every single payment made by all of your departments can be a mission impossible. Between paying for Albacross for sales, Google Ads for the marketing department, NMBRS for HR and InDesign for your design team, it’s easy to get lost.
The important part is to centralize the payment method for these subscriptions. If every team uses the same process, you know where every payment comes from and can easily stay on top of them all. Why stay subscribed to services that you no longer need? Or find out if competitors offer a cheaper or better service. Better to make sure these subscriptions are worth your money.
5. Prevent expense fraud
Trusting your employees is important, but it’s also smart to be realistic. A UK survey states that 85% of employees admit to lying on expense claim reports. Another 5% even falsify information “every single time”. Of course it is not always intended to be a lie, sometimes people forget details and just jot something down. Either way, it’s recommended that you do something about it.
Which brings us back to the first bullet point: digitizing and automating your expense management process. The Klippa SpendControl solution does exactly this. With SpendControl you combine all of the above pieces of advice into one automation platform. This solution helps you get rid of traditional expense reports, fraud and human errors. You will also obtain a real-time overview, 24/7 access from anywhere in the world and proper audit trails and business rules. A digital workflow with automation will help you save 70% on the expense processing time and cost.
If you wish to learn more about our SpendControl solution, please contact us through [email protected] or plan a demo with one of our product specialists. We would love to show you how you could get more control on employee spending, while saving loads of administrative time.