The process of managing and reimbursing expenses to employees should be made simple and efficient. The process should be beneficial for the employees as well as the organization. A clear policy helps the staff members in submitting the right expenses in the first place and knowing their limits.
A concise policy helps the employees to focus on their work and not spend excessive time in understanding the policy document. Receipts should be an integral part of employee expenses. This helps in keeping the system transparent and quick. Besides that, this is important because each expense is treated differently while calculating taxes.
Expenses should be submitted by employees as early as possible. They should be given a time deadline from the time of incurring the expenses. The expenses should then be paid back on time, as well. Employees should be given the authority to approve or reject expenses while on the move. This helps in making the process much more simpler and flexible.
The expense management process should be reviewed from time to time and the necessary amendments should be done to improve upon the same. An appropriate expense management software should be used to track and approve employee expenses.
There may be occasions where employees may misuse expenses for personal gain. Every manager must be vigilant and make sure that such misuse is controlled and dealt with.
There are certain expenses which should not be approved:
Expenses In Excess of The Defined Standard For each of the expense categories, a standard should be defined and adhered to, by all staff members. After understanding the industry and analyzing the staff expenditure, these standards must be defined in the policy document. Any expenses that are incurred over and above the standard expenses should not be approved. All the categories like food, travel, entertainment and fuel etc. must be clearly defined in the policy document along with the time-wise limits for each.
Duplicate Expenses Managers must look for duplicate expenses charged by some clever members of the team. An employee may submit an expense twice under different heads. This may also happen in case an employee is using a credit card where the payment is made with the credit card but a separate bill may be submitted for the same. All the expenses should be carefully tracked for duplicates before being approved.
Late Recorded All expenses that are recorded late must be rejected. Managers must inform their team members about this policy, well in advance. Recording the expenses late, disturbs the whole process, causing late disbursal for the rest of the team members. All employees must be trained and motivated to record all the expenses on time.
Personal Expenses Personal expenses should be clearly kept out of the list of re-reimbursable expenses. This should be stated in the policy document and communicated to staff members on a regular basis. Managers must clearly differentiate between personal and official expenditures. Any personal expenditure must certainly be rejected.
Inflated Expenses The managers should keep a track of the current pricing of travel and food etc. in the market. They should also be aware of the distance that employees have travelled for completing a particular task. Many employees may be tempted to inflate the expenses by recording the wrong details or pricing of the service used.
Here are some more tips to keep your business expenses under control. Also know the difference between accrued expenses and prepaid expense.
