When it comes to managing company finances, keeping the best practices in mind is crucial. Managing company spending is vital; therefore, executives should have knowledge about the best financial practices to make strategic business decisions. Organizations need to have the right tools in place and switch manual process to automation. Automating expense report process will save time filing &organizing expenses and importing accounts into accounting software. This article is intended to help businesses make strategic decisions about expense management.
Mandating approvals prior to making trips will lower the risk of overspend and fraud. Also, employees should not have unlimited access to corporate cards to make purchases. However, some employees may feel restricted when closely monitored. The solution must involve a pre-approval process along with controlling the employee spending. Administrator can set specific budgets to each employee. When employees need access to funds, they are required to take approval from admin for the amount and clearly state what the expense is for. Administrator can review the request and either accept or deny. The pre-approval process can prevent overspending and fraud while controlling employee spending.
Expenses should be incurred while performing services as an employee. All the expenses must be submitted promptly. Overpayment should be returned in a timely manner and any excess reimbursements must be repaid to the employer in a reasonable time.
Company Card Strategy
Today corporate card programs are competitive; many of them offer various financial and operational benefits:
- Incentives and rebates for purchases
- Corporate cards minimize the cost of handling expense reports. By integrating corporate card data into T & E system, there is no need for employees to rekey their expenses and data is accurately captured.
- Companies don’t require a receipt for anything under the specified threshold amount if corporate card is used for the transaction. This eliminates the time employees spend in creating expense reports.
- Corporate card usage minimizes the number of falsified receipts. Since all the transactions are made through the card, the chance to submit a fake receipt is very minimal.
Before automating the process, organizations used to conduct an intensive audit process to review the accounts payable process. This requires you to spend at least three full-time employees in reviewing the expense reports. By enforcing expense policy compliance through the rules engine, all the expenses are validated against corporate expense policy and other billable policies.
With automation, when an employee enters an expense that does not comply with the policy, the expense item is flagged. The employee is asked to provide an explanation or reasons for out of policy spending, based on which approvers may approve or reject. Certain expenses can be marked as personal, which can be deducted from out-of-pocket reimbursement. With corporate cards, employee spending can be monitored in the real-time.
The best practice is to always set business rules by roles, delegations and responsibilities when approving funds for spending. Approval workflows can be defined based on the hierarchy, expense threshold, attributes and other criteria. The approval process can be two-four levels, too many levels makes the process complex. Organizations prefer accounts payable department to be the final reviewer before importing the approved reports to the financial system for processing payments. Expense report software allows you to quickly approve expenses through the mobile app.
Eliminate Fraudulent Spending
Businesses rely on audits from the accounts payable department. The accounts payable department should not spend much time in ensuring business expenses are not misused. However, expense fraud can be easily accomplished. The following are some areas to look out for:
- Excessive tips
- Reporting international expenses
- Entertainment expenses
- Per diems based on the statutory requirements
Most companies go through the process of hiring financial personnel just to account employee expenses. Automated expense report software such as SutiExpense securely monitors employee spending in the real-time. Employees can only spend the allocated amount when on business travel. Expense software securely monitors the employee spending in the real-time. Expense reporting is meticulous to work without an automated expense system.
Companies need to educate employees about policies and provide them with boundaries. The following are a few ways to control employee spending and the risk of fraud:
- Card limits and budgets
- Record employee transactions and view as it happens in the real-time
- Automatic reports avoids data entry