Manage employee expenses like a pro
Traditionally, expense reports were used exclusively for the purpose of tracking all the transactions being made. Needless to say, the method was time taking and prone to error. Here are few of the best practices that a company can implement to manage business expenses seamlessly.
Fail to plan the company's expenses, and you're planning to fail. A massive contributor to a company's outlay is the expenditure made by its employees. Hence, it's all the more crucial to track it efficiently and effectively.
Traditionally, expense reports were used exclusively for the purpose of tracking all the transactions being made. Needless to say, the method was time taking and prone to error.
The need to track and oversee is usually felt if there's a big dent in the budget or the tabs are greater than the expected amount. At times when you might sense like you've lost the grasp over the finances of the organization, here's how you can regain control:
1. Create an expense management plan
Starting with the basics, any organization must have a detailed expense policy housing but not limited to:
- Descriptions about the expenditure incurred by your company that does and does not appreciate.
- Crisp and inclusive guidelines.
- Well-defined categories and budgets.
Having a well-defined system in place makes all the difference in terms of tracking expenses as the parameters become evident for the organization as well as the employees.
2. Introduce a business debit card
Once we're good to go on the expense policies, the emphasis should be entirely on overseeing the transactions.
Introducing business debit cards could be highly influential to monitor employee expenses, as long as the cards have a reasonable rate of interest or an annual fee.
Being eligible for most such cards is independent of your credit. The factor of credit card debt gets eliminated entirely here, and moreover, there might be options to tack on additional limits on the expenditure in each category. Adding a limit in each category will enable you to catch expenditures made over the defined limit; therefore tracking and controlling the expense.
3. Using credit cards with a fixed limit
An alternative to business debit cards could be credit cards with a specified limit that provides employees the freedom to spend, along with expenses being tracked and regulated through a centralized system. The major advantage of this method is hassle-free operation. Instead of reconciling expenses every month, employees can function under a fixed budget, which can be decided at the company's convenience.
Dealing with a credit balance at the end of each month will streamline tasks to a large extent for the finance unit. To add the cherry on top, if opting for direct debit, you would not have to worry about even paying off credit each month.
Additionally, employees will invariably have added benefits that an average credit card user obtains, such as bargains, rewards, deals, and privileged access to clubs and restaurants..
4. Automate expense approvals
Once transactions are made, it's all about the approval processes headed by the finance department.
Approvals can be granted either before or after the payment is made. In the case of a pre-approved expense, the manager ascertains whether the expense is a necessity, runs it against the policies of the company, and then gives it a green flag. On the other hand, post-expense approvals take place after the expenditure is made, and is usually carried out by manually reviewing bills and receipts, taking up a lot of time on part of the accounts department.
The process of approvals can be sped up massively by automating it, using modern tools. If the expense being made by the employee fits into the defined appropriation, the transaction would be made right away, mimicking the working of a standard debit card.
On the other hand, if the expenditure exceeds the pre-defined budget, a push notification would be transmitted to the manager for real-time approval. Thus, you won't just end up automating a regular process, but will also be tracking and governing employee expenses in the most efficient manner.
5. Expense Management Software
Using an expense management software could potentially digitalize expense reports and the approach of reimbursing employees. Such software is easy to set up and makes the processes simpler for the employee. Some of these software also have the facility to directly upload pictures of receipts, which entirely eliminates any manual effort and human error.
It becomes a fully automated option, other than the pre-requisite of the employee making the initial expenditure which would later be reimbursed. Most of the software in the industry also allows senior managers to define the time when payments should be revisited and assented, along with lapses being notified to the team.
It furthermore simplifies the process for the organization, making the expenditure process more transparent and effortless. Any software or application management software works well for small to mid-sized companies but gets a little tricky when the number of transactions goes beyond the threshold.
6. Zero in on subscription monitoring
Subscriptions make working significantly painless for every organization that operates using modern SaaS tools. Having said that, topping them up monthly or annually isn't just an irritant, but also makes the process of tracking employee expenses thorny.
It's essential to centralize payments like these since it's shared by most employees in a particular department. If a standard operating procedure is employed to deal with said expenses, the finance team will only have to worry about tracking additional charges.
If virtual cards are assigned to every employee, tracking subscriptions become hassle-free as each settlement will have a documented rationale. It likewise has the accounting code and the attributes of the one approving it. Following the pipeline, these expenses can be fully automated down the line.
7. Digitize invoice reclamation
As uncomplicated as filing invoices sounds, it can get convoluted from time to time merely because one can lose bills and receipts on occasion. Chasing and matching receipts can become a monumental waste of time and effort for the accounting and finance teams, especially when a few invoices are misplaced.
An effortless fix would be to digitize receipt collection using a scanning application or other means. It's straightforward and efficient and eradicates the time taken for data entry. Additionally, tax offices have also started accepting digital invoices, which make the operations all the more uncomplicated.
To be on top of all employee expenses, it's crucial to find the apt expense management system for your business. With the right platform, not only will you be able to effectively control and even cut costs, but you also help your employees bring out their best.
Having access to real-time insights into where your employees spend company funds is crucial to the success of your business. And with the right tools, you can free your employees from micromanagement while also improving efficiency all around. Start incorporating the tips and tricks discussed above in your business today by signing up for a modern-day expense management platform that suits your company’s needs and tracks employee expenses like a pro!
Schedule a call with our experts to learn how Alaan lets you automate expense management and track company spending in real-time. Sign up now. It’s free!