5 Ways to Improve Your Employee Expense Management

Keep spending in line and your company cash flow on track

fix employee expense management

Have you recently uncovered major holes in your budget only to find out they are increasingly due to unaccounted employee expenses? Corporate expense accounts are a great feature of businesses but can also be to their detriment if not managed appropriately. Whether you’re wasting accounting department or management hours chasing after expense reports or losing thousands of dollars in expenses that cannot be justified, you are likely going to suffer some major cash flow problems sooner or later.

From incentivizing better behaviors to improving limitations, here are a few ways to improve your overall expense management.

  1. Limit expense accounts.

    If you're having trouble pinning down exactly what expense accounts are paying for, limiting the number of active accounts is one way to keep costs from going out of control. Use a credit card provider who supports creating employee cards with specific spending caps, or provides cash accounts with a per diem payment. If an employee needs expenses beyond the set amount, require receipts and justification for account expenditures. You may want to take this an extra step by determining allocations by employee position or tenure to keep processes structured and understandable as your company grows.

  2. Provide incentives to encourage expense tracking.

    Expense tracking is another responsibility your employees may not want to take on. Adding more paperwork while they're already out on a business trip can be frustrating, so give them an incentive to do so. Provide extra perks or per diem payments for on-time receipt submission, perhaps in the form of a department or company-wide contest. Some perks to consider could include small gifts, employee recognition or lunches. Poll your employees to find out what perks they would like to receive and then create standards and thresholds for issuing awards so employees know what to aim for.

  1. Clarify acceptable and unacceptable expenses.

    What you think is an acceptable employee expense and what an employee thinks may be two different things. Instead of having arguments with employees over unnecessary expenses, create an operational manual defining exactly what you consider acceptable expenses for common costs such as lunches, dinners, and business supplies. This should include maximum limitations on expenses such as airline tickets, meals or hotels and address upgrades and add-ons that your employees may be tempted to add to their expense account. Reasonable and justifiable should be explained in the most direct and clearest of terms.

  1. Synchronize corporate card statements with accounting software.

    Many accounting programs pull card transactions directly from the credit card back end so you aren't spending a significant amount of time matching up receipts to transactions. You can also require employees to use an expense tracking and reporting software so that they can scan and match receipts in real-time. It will help keep everything coordinated—and help you pinpoint any violations of acceptable expense rules.

  2. Automate expense restrictions.

    Use expense management systems that allow you to define parameters in expense costs, categories, and unacceptable expenses. When you handle these costs automatically, you cut down on the amount of time you spend working on the system. If there are major issues, the system brings these to your attention without requiring your input on a day-to-day basis. Give employees the opportunity to see how this software works so they understand how you will be monitoring their spending. This should help decrease dramatically the number of employees violating expense rules.

Finally, don’t forget that some employees may just not “get it”. You can consider revoking expense account privileges of employees that are continually violating company rules and instead require their initial outlay of expenses.

By only reimbursing acceptable expenses, you should virtually eliminate the potential for violations. Of course, keep in mind that employees who must have large expenses may not have personal resources to do this—working for your company should not create an undue burden on your employees. By finding a harmonious meeting point, your company, your employees and your expense management should all find a more productive means.