Is Expense Management For Your Business? Finding Funds by Streamlining Employee Expenses
For businesses just starting out, costs are probably one of the most watched over and monitored aspects of operations. Startups and SMEs are known to carefully observe costs coming in and out and keep their belts tight, forgoing necessities (HR, for example) to hit the ground running. But as your business grows, it can become more difficult to keep a track of exactly what expenses your employees are making, which can negatively impact your bottom line.
Some MPs are claiming nearly £10,000 in expenses for ‘dependent children’ who are 18 or older and are studying at university
We’ve all read stories in the press about employees who have taken advantage of the business expenses they put through, but it’s surprising how often unauthorised expenses go unnoticed.
How does it happen?
Some of the main problems I see isn’t necessarily with the things that are being claimed for, but the lack of transparency surrounding the claims and the generalised categories that items get claimed under. Mix that together with companies just not enforcing rules or audits and, I’m sorry to say, but they leave themselves wide open to be taken advantage of.
The survey of 2,500 UK employees found that those who submit work expenses or have access to an expenses account, spend an average of £117 per month on unauthorised and inflated purchases, totalling £1,404 over the course of a year. On a national scale, this amounts to £1.9 billion.
Remember the headmistress who made the headlines last year for claiming a £36 toilet seat as an expense? Following an inquiry into her expense claims at work, the most worrying part was that when the BBC requested details under the Freedom of Information Act, they discovered that £12,515.30 of the £21,337.25 she put through were not supported by any receipt evidence.
Something that the college could have detected much earlier with the right tools or systems in place.
So, is expense management for your business?
The following benefits that we have identified might help you decide:
#1 Transfer cost savings identified into other business development opportunities
By easily monitoring your business expenses using software, you can look at which areas need cost controlling to limit the amount of money going out and create cost saving initiatives.
Cutting down the costs of unnecessary employee expenses lets you transfer those savings into other areas of your business that may require development or that may otherwise have been neglected due to tight funds.
This will translate to having more disposable cash that can be invested into what is important for the success of your company.
#2 Real-time expenses tracking
Being able to take a picture of your receipts and upload them right then and there onto an expense management app on your phone not only makes it easier to tally up later for all departments involved. It also saves the employee time having to search back through paperwork and potentially lose out on reimbursements from misplaced receipt evidence later on.
#3 Streamlined process
With everything stored, tracked and signed off in one place thanks to remote access, the whole process changes from a rushed job to meet payroll deadlines to simple uploads and report running.
Labour resources previously used on the whole process will in-turn be reduced and can be used elsewhere in the department that’s needed.
#4 Improved chances of reaching financial business goals
You can only create plans to reach your business financial goals if you know exactly where your money is going. Collecting data from expense management reports will highlight areas where costs could be spread out or reduced to allow for more strategic planning.
#5 Build trust between employer and employee
When issues are highlighted regarding expenses, it threatens the trust relationship between the employer and employee, which is never a good way to run efficiently and effectively.
Instead of worrying whether your staff are helping themselves to extra reimbursements here and there, put an expense management system in place that is transparent and easy to implement to take the suspicion out of the equation.
#6 Create conscious decisions across organisation on spending
If you place limits on what can be reimbursed, you can be sure your employees will be more conscious about what they decide to stick on their claim form.
For example, in the case of the previously mentioned principal, if Bishop Burton College had put a minimum distance away from home in place that would require an overnight stay, I’m sure the principal would have made the short 15 mile drive back home just fine.
The same can be said with limits on nightly hotel costs, mileage, alcohol allowance and so on.
40% of respondents said that having tighter spending controls or a monthly limit on their company card would influence them to spend more responsibly.
#7 Better return on investment decisions
You can better track your return on investments if you can track how much an event costs versus what your business made from that event. Then with that information, you can decide if it is worthwhile to continue going to those events in the future or make changes to the limit placed on such an event with proper data analytics to back your decision.
#8 Reduce fraudulent activities with limits on spending amounts
It’s reported that 38% of employees claim expenses for things that they know they shouldn’t, so make it completely clear what can and cannot be put through on expenses and set limits that require receipt evidence.
Expense reimbursement fraud from claiming or inflating expenses is something that 8% of employees claim they do only when they are having a hard time at work, so that is another issue to tackle.
Building a wonderful company culture where employees always feel valued, motivated and respected may deter them from even considering jeopardising their jobs for.
It’s reported that 38% of employees claim expenses for things that they know they shouldn’t
#9 More transparency
Sometimes the process is too generalised, making it so easy for the claim to go under the radar. And the fact that unauthorised employee expenses only seem to get flagged up once a large amount of money has already been lost is not good news for anyone.
Creating more transparency around the expense management procedure and a list of authorised items may help control unnecessary expenditure.
#10 Tax returns and audits are easier to carry out
With everything stored in one secure location, no paper sheets to hunt down or filing cabinets to trawl through, authorised transactions with electronic trails would show exactly what expenses have been made, by who, with details of dates and sign offs meaning everything is readily available for tax return submissions.
#11 Better protection from unauthorised business expenses
Employees are less likely to abuse their expenses allowance if it is made clear that everything going through is actually going to be checked or properly signed off.
Around a third (32%) said that they would be more careful if their colleagues had visibility into their spending habits, and 30 percent said the same if their boss received a notification every time they made a purchase.
However, employee expense management software alone won’t do it
While having expense management software in place certainly provides many advantages to a business, having an expense management system in place on its own will not be the complete solution to any of the problems that companies face when it comes to controlling employee expenses.
It would be wise to support the HR software with an employee expense policy and procedure, employee training, sporadic audits and an annual review of how your business is actually benefiting from some of these expenses will help to determine whether they are necessary expenses going forward.
Have you been a victim of expense reimbursement fraud within your company and how did you tackle it? We would love to find out!
CakeHR is a one stop shop for your HR management needs. With attention to user experience & making the software easy to use yet packed with loads of features we strive to make your HR management as easy as a piece of cake. We offer six modules which you can mix & match, similar like selecting the layers that go into the perfect Cake you want to eat. Expenses module is just one of them & is available on both – web and mobile app versions!
To learn more, click here
Try it out now by selecting the Employee Expenses module & registering here
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