An essential part of effective expense management is a yearly review. It allows you to assess past performance and then preparing your operation for the challenges ahead.
For most finance teams, this is one of the tasks that will be carried out at the start of a new financial year. For UK based companies, the tax year begins on April 6th. This unusual start date was first set by the British Treasury in 1800 and was based on the date of the old New Year’s Day (March 25th).
While the business years differs across the globe, the importance of carrying out an expense management review remains the same. It’s a chance to hone performance and to prepare for the next 12 months.
5 ways to keep your expense management in top shape
Here are our expense management tips to help you tighten up your process and avoid some common mistakes.
1. Update your expense policies
Is your expense policy fit for purpose? Does it properly cover any recent legislative changes? Does it fairly reflect any fluctuations that occurred in the cost of business travel related expenses?
These are the areas that need to be reviewed and adjusted at least once a year - ideally, quarterly. A failure to adjust and update a policy will lead to multiple potential problems, including compliance risks and an increased threat of workplace fraud.
2. Review your system
If your business still uses a traditional paper-based approach to expense management, switching to a cloud-based system is a simple and cost-effective way to experience an immediate boost to performance.
The change can offer long-lasting benefits across the entire business. It can provide a fast and simple process for claimants and a streamlined, automated approach to management which transforms the way expenses can be controlled.
3. Check petty cash
The purpose of petty cash is to provide a quick and simple way for employees to cover any small office-based costs. But the self-reliant nature of the "traditional" system makes it particularly susceptible to errors, inefficiency and fraud.
A petty cash review should include checks to make sure that each office set-up is being properly monitored and policed. Making sure that cash floats tally with claimed costs is the starting point for this review process.
4. Maximize mobile benefits
The major benefits of a cloud-based system come from removing any need for paper-based processes. Webexpenses uses a mobile app with smart OCR scanning to instantly convert paper receipts into a digital form.
In addition, the more claimants who are managing their expenses via the app, the faster and more efficient the overall management process will become. Whether it’s an email or team briefing, it’s important to highlight the benefits of the mobile approach.
5. Clean-up your categories
Expense categories can become a confusing mess unless they are regularly reviewed, consolidated and tidied. This reduces management visibility and heightens the risk of policy and compliance breaches.
With a cloud-based system, new categories are easily created, as many as are needed to accurately reflect each and every cost. A particular trap to avoid is the use of generic ‘miscellaneous’ categories that hide the true nature of costs.
In terms of preparing an expense operation for the next 12 months, there are some common themes to be aware of:
No matter where your business is located, the need to move away from paper-based ways of working is becoming a necessity. The UK Government recently introduced Making Tax Digital legislation which restricts the ability to submit information manually.
These same kind of changes are taking place throughout the globe as external authorities push towards digitally-connected ways of working.
Attaching paper receipts to claim forms was the primary way that employees used to prove the legitimacy of their expenses. But there is a growing number of digital methods being used to record transactions.
Looking forwards, an expense management system needs the flexibility to handle paper receipts as well as digital formats such as email, PDF and imported back details. Webexpenses is future-proofed to handle any kind of receipt.
Digital communications are changing the way we work. Ultimately, they remove the need to be so reliant on the traditional office business structure. Therefore it is vital for finance teams to have the tools needed to cope with a more flexible and mobile workforce.
For expense management, this means having a cloud-based system which allows costs to be managed and controlled from any location with an online connection. This allows an account manager to monitor costs and approve claims from wherever they are.
Summary: Plan for success
An effective yearly review will look at the efficiency of existing processes and assess the likely challenges faced over the next 12 months. For those companies still using a traditional paper-based approach, the move to a cloud-based system ticks both boxes.