Here are 5 Ways You Can Optimize Employee Spending
Updated: Nov 5, 2018
Delegation is key to be a successful business leader, but sometimes handing over the reins means handing over your wallet as well.
While it can be nerve-wracking to give your employees spending power, you can feel confident doing so by just having the proper protocol in place.
From budgeting to reimbursement, here are 5 ways to reduce the stress of employee spending:
Keep the Policy Sweet and Simple
Just because you’re dealing with finances doesn’t mean your expense policy should read like an accounting exam.
Even the best employees will slip up if they can’t understand the rules.
Treat your policy like an FAQ section and make sure the questions are answered in a straightforward way. How much can be spent? What documentation is required for reimbursement? What is the process for submitting an expense? What are the repercussions for fraud? Take your new hires through the policy and provide easily accessible copies for them to read on their own. Lastly, don’t be afraid to make adjustments if something proves to be unclear. Just be sure to notify your staff of any changes made.
Budget Each Expense Category Time and time again studies have proven that people spend more efficiently when they have a well-defined budget. Help your employees and provide one to them. Break employee expenses down into categories such as airfare, hotels, dining, etc. and allot specific amounts to each depending on the employee’s expected needs. Make sure to involve the employee’s input as they’ll be more likely to respect limits they feel they’ve helped set themselves. Once a budget is set, hold them to it. Be reasonable and flexible in the planning, but firm with the execution.
Utilize Prepaid Cards If you’re uncertain how much to allocate to each expense category, but would still prefer to set a specific budget, you can do so with prepaid cards. Prepaid cards give you control over how much your employee is able to spend by limiting them to amount you put on their card. If an employee wants to spend past their card’s limit, they will need your approval first as you will have to add funds to the account.
Require Timely Reimbursement Requests The enemy of accountants everywhere is time.
The longer it’s been since an expense occurred, the harder it is to review and approve it with confidence.
People simply don’t remember every detail and some information is no longer available. While having receipts and detailed expense reports make it possible to process old claims, having them taken care of immediately is even better. Not only does this allow you to more accurately balance your books month-to-month, but it gives you the chance to catch fraudulent activity sooner. Make sure employees know they need to get a report in within a certain timeframe and offer them fast and easy ways to file whether through a mobile expense app or in hard copy.
Pursue Fraud Training Speaking of fraudulent activity, we could write an entire article about ways to spot and deal with employee expense fraud. That’s why we recommend training yourself and your staff before letting the money start flowing. One great way to prevent fraud is to have all business expenses applied to specified prepaid or credit cards. This way you can crosscheck the bank statements against reimbursement requests. That does not mean you should not ask for receipts as well.
Mandate your employees provide receipts for all transactions so can review an itemized list for each transaction.
This will prevent employees from tossing a few personal items into the cart.