A BRIEF OVERVIEW ABOUT EMPLOYEE EXPENSE MANAGEMENT

All organisations prioritise managing corporate expenditure, but manual methods, paper receipts, and handwritten notes are challenging to maintain. Businesses may speed up the expenditure management process, reduce errors, as well as speed up reimbursements by employing software to track and monitor employee spending.

What Exactly Is Employee Expense Management?

Employee Expense management monitors employee spending and determines how the corporation will reimburse for the costs incurred. Furthermore, it provides the procedures and rules necessary to control this kind of spending. For example, if workers are given daily meal limits while travelling, the employee expense management process will account for these restrictions when calculating employee reimbursements.

Why is Employee Expense Management so important?

All businesses must be able to pay their bills on time to stay in business, and employee expenses are one of these costs. Any organisation with employees who do business outside of the office will always need expenditure control. An outside sales manager’s simple lunch with a client must be documented, authorised, and rewarded.

Businesses that use good employee expense management practices can offer refunds quickly and adequately. Employees resent having to wait months for compensation after spending expenses.

Various Types of Employee Expense Management

Businesses control their expenses in several ways, including:

• Tracking of documents. Paper receipts are gathered by employees and submitted to the accounting department for monthly or quarterly approval; this is an outdated, old-fashioned way of expense control.
• Spreadsheets. This is a popular alternative for firms that want to reduce their reliance on paper but have not yet implemented an automated expense management system.
• Expense tracking software. This strategy simplifies the expenditure management procedure. The application alerts managers to pending spending reports, giving them the option to accept or reject the claim. Approved expenses are then promptly sent to accounting for reimbursement.

Process of Employee Expense Management

Employee Expense management is a multi-step procedure that begins with tracking and reporting expenses and ends with reimbursing the employee.

With the proper method in place, firms may monitor their expenditure, ensuring that employees aren’t abusing the system and taking prompt corrective action (for example, telling employees that they’re spending more than they are supposed to in certain areas). If, for example, a salesman has been travelling first class without prior approval, a quick inspection of their receipts will reveal the violation.

Manual methods may make identifying these issues challenging, particularly for firms with growing field staff. Common problems are missing information, acceptance of spending without a comprehensive review, and slow approvals. This wastes the employees’ time and leaves them wondering where their expense reimbursement cheques are (frequently because they are already incurring expenditures for the following closure period).

Policy on Employee Expense Management

One of the best & practical methods to reduce employee spending is implementing a cost-management strategy that everyone must follow. A policy may explain why an expenditure is denied or questioned and help assess if the costs should be repaid.

All employee expense management guidelines should contain the following:

• A detailed breakdown of all of the company’s expenses.
• A detailed list of costs that the company will not fund.
• Wording that is clear and uncomplicated (so that there are no doubts as to what is accepted and what is not)
• Businesses must constantly modify their expenditure management policies. As your company expands and grows into new business sectors, its policy will need to be updated to reflect these developments.

Do not forget to include best practices such as requiring pre-approvals for specific expenditures, clearly outlining the approval procedure and other elements that may help minimise potential complications when costs are highlighted.