What the future holds for sundry expenses and how to handle them
Even the most organized of kitchens are liable to have that one drawer which is jam-packed full of random odds and ends. It’s the place where you find those things which don’t really fit anywhere else…old keys, batteries, candles, etc.
And the accounting equivalent of this drawer has traditionally been the sundry expenses category. This is a miscellaneous grouping designed to absorb all of those small costs that don’t quite fit anywhere else.
It’s a quick and simple way to handle expenses that don’t fit neatly into any of the company’s existing categories. But, just like the kitchen junk drawer, it has a tendency to quickly become chaotic and out-of-control.
The convenience of moving costs into a sundry category often turns it into a dumping ground for any awkward expenses. In doing so, it creates a fuzzy and grey area in a company’s accounts which becomes difficult to untangle.
How to uphold compliance to avoid fraud and other security risks
It’s the kind of area that can pose a significant risk in terms of compliance, errors, and fraud. And it’s the type of category that tax authorities will pay particular attention to when carrying out an investigation or audit.
The less information they can find about the exact nature of company costs, the more suspicious they are likely to become.
But the reliance on a sundry expense category is becoming an increasingly outdated and unnecessary practice as more companies switch from paper-based to digital expense management systems.
These virtually eliminate the need for paperwork by allowing employees to convert any receipt they receive into a digital form via a smartphone app. It replaces manual and paper-based ways of working with automated digital processes.
A major advantage this provides to companies is that they can easily create, manage, and monitor any number of expense categories. The system allows the claimant, approver, or accounts department to add and tag the correct categories.
While these changes can be done instantly on a digital system, the equivalent category additions and changes when using manual methods would be a slow, error-prone, and resource-sapping process.
Another way in which a digital system such as Webexpenses can help to remove the reliance on the old sundry category is by providing a much better way to handle any petty cash accounts that may operate within an organization.
By integrating petty cash into the main expenses set up, it allows those everyday office costs, such as small reimbursements for coffee or stationary, to be recorded with the same level of accuracy and detail as any other expense.
With a manual system, these individual costs would often be lost as all petty cash expenses ended up being classified under the sundry category. The time and hassle involved in adding and modifying categories discouraged any changes or updates.
By removing this problem, finance teams are now able to easily manage however many categories are required to provide an accurate and compliance-friendly record of employee expenses. It removes the need to rely on the accountancy equivalent of that messy kitchen drawer and provides a more transparent and efficient way to stay on top of claims.
You can find out how Webexpenses provides a smarter way to manage and monitor expenses by taking it for a no-strings demo, here.