How do you keep control of employee travel expenses when costs are being incurred thousands of miles away in an overseas country? Well… its one of the toughest challenges that is faced by expense managers.
Along with all the normal problems you’d expect, there are the added complications caused by distance, different currencies, and legal systems. Without a robust system in place, it’s an area that’s susceptible to runaway costs such as a few too many drinks at the hotel bar, or a “small” upgrade to a business class ticket.
Expense fraud is a particular issue with dishonest employees able to exploit management inefficiencies. With it often taking weeks before travel expenses are processed, fabricated and exaggerated, travel costs can easily go undetected.
It’s a challenge where digital technology is providing to be a powerful ally, providing more effective ways to streamline and police overseas costs. Here’s a look at a handful of ways that you can make sure your employees aren’t making those little extra purchases.
Have a policy in place
A surprising number of businesses don’t have an expense policy which covers overseas travel. This tends to be the case with smaller businesses where foreign travel is likely to be the exception rather than the norm.
An effective expense policy should cover both domestic and overseas travel – creating clear guidelines on exactly what can be claimed, and the processes for doing so. It needs to be fair, accurate and accessible.
A cloud-based management system allows policy reminders to be delivered in real-time via on-screen notifications. It can also automatically alert a finance team whenever costs breach the set limits.
Use expense management apps
The smartphone has become an essential tool for business travelers. It has transformed the way employees are able to manage and record their expenses while on an overseas trip.
Webexpenses provides users with a powerful expense management app. It uses ACR (Automatic Character Recognition) scanning all paper receipts to be converted into a digital report in less than 20 seconds.
This streamlined process means accounts can be updated as and when costs are incurred and it removes the dreaded and painful post-trip task of having to manually process a bundle of foreign receipts.
Try to plan ahead
The more business travel arrangements can be planned ahead, the lower costs are liable to be. Research suggests that booking a business trip 28 days in advance results in 44.7 percent lower costs than if it had been arranged three days before… that’s a lot of saving.
The cost advantages of planning ahead apply to all of the main expenses relating to business travel – flights, hotels and rail trips. So allowing employees to leave travel bookings to the last minute can significantly bump up costs.
While this needs to be managed, the additional costs need to be balanced against the advantages delivered by a flexible and agile approach to business travel.
Control currency conversion
Having to deal with constantly fluctuating exchange rates is a particular challenge when handling overseas expenses. When currency conversions are being done manually, it makes the processing of reports a slow and error-prone task for finance teams.
It’s one headache that can be effectively removed with the use of a digital expense management software. This allows businesses to be able to automate the handling of multiple currencies.
Accurate currency conversions are done based on the exchange rate at the time that the cost was incurred. It creates a simple and fuss-free way to manage a troublesome area of expense management.
Stay on top of tax rules
Trying to figure out the tax rules for different countries is a daunting prospect. But avoiding this area means that many companies are missing out on expense costs that can be legitimately reclaimed.
Recovering these costs is made a whole lot easier when a digital management system is being used. This provides easy access to the accurate data that’s required by the tax authorities.
It also allows expense information to be easily shared with agencies that use overseas VAT reclamation. It gives companies the option of recovering costs while avoiding the complexities of international tax laws which nobody wants to get wrapped up in.
If you’re interested in making sure your employees aren’t overspending on their business trips away by implementing an automated system, feel free to contact us today.