6 Tips for Managing Business Expenses
Today we are going to give 6 best practices that will help you streamline the entire expense management process. The idea is to simplify the three steps: submission, approval, and reimbursement.
1. Draft a sound expense policy
The first step toward building an efficient process is to define a clear and fair expense policy. Everyone in the company should understand the policy and therefore what constitutes a legitimate business expense and what falls under personal expenses. The key ingredient for a successful policy is to make it short, no more than a few pages. Otherwise, no one will be reading it. You should also review it each year to ensure that it is up to date.
Once people get used to a routine, it’s hard to change their habits. That’s why it’s better to get the right policy in place as soon as possible.
2. Gather only necessary information
It’s a good idea to ask only for necessary details. Some companies ask their employees to submit throughout expense reports. Such reports are difficult to create and also to process. It’s just a waste of time. On the other hand, you should not accept an expense item with just a date and a price. Gathering the merchant name, amount, date, and a picture of the receipt is a good balance. This way you speed up the process of submitting expense reports while avoiding delays, down the road, due to potential non-compliance issues.
3. Set a clear timeframe
Having a clear and public timeframe in place is definitely a best practice that all companies should implement. Employees should be encouraged to submit their expenses within a reasonable time. Today many online platforms such as Keepek enable you to create and submit reports on the go which can considerably speed up the process. Of course the timeframe should apply to everyone, including the company. This will keep everyone happy and encourage them to play by the rules.
4. Get managers involved in the process
A good process is one that is simple and yet robust. Ideally you should avoid adding layers upon layers of control and bureaucracy. One manager is enough to swiftly check and approve expense reports. However, she or he should not be shy to push back if something doesn’t adhere to the company policy.
5. Embrace technology
We often see managers accumulate piles of expense reports, with no time to check them all. At this point, employees get frustrated and start chasing them up to get their expense reports approved.
Technology can help you increase productivity and therefore resolve this issue. A good online solution can enable your managers to check and approve reports anywhere and anytime. Using a mobile application, expenses can be both submitted and approved on the go.
6. Pay as quickly as possible
Noting could be more demoralizing than waiting for an unreasonable period of time to be reimbursed. Business expenses are there because employees (salespeople, contractors, consultants…) are undertaking actions that will help grow the business. You certainly don’t want them to delay that business trip or to not invite that potential client to dinner because they’re afraid not to be reimbursed swiftly.
Ideally, payments should take not more than a week or two. And it should go directly to the employee’s bank account. Prompt payment can improve morale and productivity.