Expense Reporting Best Practices
Many people complain that expense reporting is difficult and sometimes confusing. The good news is that implementing and enforcing a few best practices could make your life easier and save you a lot of time and hassle.
Have a sound plan to manage business expenses
The first thing, if you’re responsible for expense reporting, is to get a sound expense plan. You should sit and ask yourself a few questions:
- Do I need to track expenses real time?
- Do employees need to submit their expense reports after each client visit
or at the end of each month?
- How much information should the report display?
It’s important to get everyone in the organization on the same page. Making sure that employees and contractors understand the system will expedite the process and limit frustration. Here at Keepek we believe that asking employees to track and report their expenses while traveling or conducting business (on the go) is a sensible approach.
Explain what does qualify as a legitimate expense
Explaining what qualifies as an expense (and what doesn’t) should be a priority. You will be surprised to learn that many well-intentioned people still abuse the system. A classic is when an employee catches up with an old friend while on a business trip to another town. Sometimes the coffee or the dinner they have together ends up as a company expense.
It should be clear to all contractors and employees that only purchases that contribute to the success of the company are legitimate expenses.
It is also a good practice to verify what the taxman will accept as an expense. Often the company reimburses its employees the total expense even if the IRS recognizes only a fraction of it as a business expense. Once those categories are identified, you can cap the amount an employee can spend on them.
Technology can simplify the process
Many people still use spreadsheets or paper-based systems to manage and report their expenses. Such systems are tedious, error-prone, and often result in a lengthy reimbursement cycle. It is easy to lose receipts and to forget to record mileages, especially while on a business trip.
There are a few digital solutions that could help you streamline the entire process. Using a mobile application such as Keepek will enable your employees to take a picture of their receipts and to record their mileages on the fly. They can easily create and submit expense reports without delay. A good digital solution should enable you to create and enforce your own expense policy. It should also help you gain visibility over the company’s spend.