Modernizing Management of Staff Expenses in a Hybrid Work Setting

  • January 13, 2024
  • George Mahoney

Employee expenses can quickly become a headache if not managed properly. Though the pandemic has shifted the focus away from traditional expense categories such as travel, it’s more crucial than ever for companies to keep an eye on spending.

Implementing a sound expense management process ensures transparency, accuracy, and efficiency. Whether you are just starting or looking to refine your strategy, this article will provide actionable tips for better employee expense management.

Hand holding a digital padlock with binary code

Understanding Expense Management

Expense management involves tracking employee expenditures and determining how the organization reimburses these costs. It consists in understanding and applying procedures and policies that control spending. For instance, if employees receive daily meal allowances when traveling, the expense management process should incorporate these limits while generating reimbursements.

Why Expense Management is Crucial

Every company, regardless of size, needs to manage expenses effectively. An organized expense management system helps prevent fraud and errors and offers real-time insights into corporate spending.

Developing an Expense Management Policy

The foundation of effective expense management is a clear, comprehensive policy. This policy should outline which expenses are reimbursable and which are not. For instance, according to IRS rules, certain commuting costs are non-deductible, but meals under specific conditions can be. The key is to keep the language simple and straightforward to avoid confusion.

  • Define reimbursable expenses
  • Set clear limits
  • Make it enforceable and equitable

Automating the Expense Management Process

Relying on manual methods for managing expenses is outdated and inefficient in today’s digital landscape. Automation can revolutionize how companies handle expense reports, making the process smoother for everyone involved.

Payment terminal keypad with multiple Mastercard credit cards

Benefits of Automation

Automated systems offer numerous advantages, such as real-time notifications, quicker reimbursements, and increased transparency. By using automated expense management solutions, companies can save many hours each month and focus on more critical tasks. Automation also ensures compliance with company policies and regulatory requirements, minimizing the risk of fraud.

Utilizing Business Credit Cards

Providing employees with corporate credit cards simplifies expense reporting and centralizes spending data for better tracking. Companies that prefer not to issue permanent cards might consider using single-use or dollar-amount cards, depending on the situation. This approach can help manage cash flow and keep a detailed record of expenses.

Advantages of Using Business Credit Cards

Business credit cards help organizations manage cash flow and keep detailed records of expenses. They also provide security, as expenses can be monitored in real-time. Implementing platforms to manage these cards can further enhance the efficiency of expense tracking. Additionally, business credit cards often come with rewards and benefits that can benefit the company.

Regular Audit and Review

Expense management should not be a “set it and forget it” process. Regular audits are vital to catching abnormalities early, making policy adjustments, and ensuring compliance. Platforms can facilitate regular audits by providing robust expense tracking and reporting capabilities. Regular reviews help identify trends and areas for improvement, ensuring that the expense management process remains adequate and efficient.

Leveraging Technology for Receipt Management

Gone are the days of keeping boxes of paper receipts. Digital tools now allow for the electronic capture and storage of receipts, simplifying the entire process. Employees can use mobile apps to capture and submit receipts in real time, making the expense management process more efficient.

  • Electronic storage
  • Real-time submission
  • Accessibility from various devices
Person coding on a large computer screen

Employee Education and Involvement

Educating employees about the expense management policy and the tools they can use is essential for compliance and efficiency. Regular training sessions and an accessible policy document can keep everyone on the same page. Engaging employees in this process ensures they understand the importance of proper expense tracking.

Promoting Transparency and Accountability

Transparency fosters a culture of accountability, reducing the chances of fraud and errors. Encourage department leaders to review and provide feedback on expense policies and incentivize cost-saving initiatives. This collective approach can lead to more effective expense management.

Preventing Expense Fraud

Expense fraud can be a significant issue if not addressed properly. Clear, transparent policies reduce the risk while fostering an environment of accountability. Systems like Clyr can automatically flag irregularities, helping to prevent fraudulent activities.

Tips to Prevent Fraud

  • Implement clear policies
  • Use automated systems for tracking
  • Encourage transparency and regular audits
Laptop screen displaying a hacker's mask

FAQ

What is the best way to manage employee expenses?

Implement a clear policy, use automation, conduct regular audits, and educate employees about best practices to manage employee expenses effectively.

Why is expense management critical?

Effective expense management helps prevent fraud, ensures compliance, and provides real-time insights into company spending, ultimately saving time and money.

How can automation help in expense management?

Automation can streamline expense management by providing real-time notifications, reducing errors, and speeding up approvals and reimbursements.

What should be included in an expense management policy?

An expense management policy should clearly outline reimbursable expenses, set limits, and define the approval process to avoid confusion or discrepancies.

How often should expense reports be audited?

Regular audits should be conducted monthly or quarterly to catch any abnormalities early and ensure compliance with the expense management policy.

George Mahoney
Chief Financial Officer, SMB Finance Expert

George Mahoney is a seasoned expert with extensive experience in financial management for field services, construction, and real estate companies. Known for his strategic financial planning and expertise in optimizing operational efficiencies, George has consistently driven profitability throughout his career.