Time for change
Managing employee expenses should be easy. It’s simply a way to reimburse employees for any business costs they cover from their own pockets. But for most companies, the day-to-day reality of expense management is far from simple.
It has been allowed to grow into a notoriously difficult area of company finances to properly control, and as a result is now a breeding ground for errors, inefficiencies and workplace fraud.
These problems have been caused by the traditional methods that have been used to handle expenses with manual processing of paper receipts, expense forms and Excel spreadsheets.
But the limitations created by these processes have now been removed.
Taking control of your expenses
The emergence of cloud-based solutions means that no business should tolerate an inefficient, costly and risky expense management setup. With the right tools and attitude, we can transform the way expenses are managed.
The benefits include:
- Streamlined operations - fast, efficient processes
- Automated checks - real-time monitoring and alerts
- Flexible solution - fully scalable ways of working
- Mobile working - managing expense from wherever you are
- Management visibility - accurate data on every aspect of expenses
The purpose of this guide is to show how your company can unlock these advantages.
The advice contained is based on two decades of experience acquired by Webexpenses. We help businesses across the globe to take effective control of their out-of-office costs.
This report provides an overview of the two key elements of successful expense management:
Expense Policy - How to craft company rules and protocols
Expense Management - The tools to manage and monitor policy
The starting point for expense management is having a policy.
This simply sets out your company’s rules and regulations relating to employee expenses - what can be claimed, how it can be claimed and any specific limits or allowances.
You can find a full guide to creating an expense policy here.
But here, we are going to deal with some of the most common questions that we receive about policy creation.
Do we really need an expense policy?
The simple answer is YES. Absolutely.
No matter what the type or size of a company, if costs are being reclaimed by employees - you need to have a policy. This is not just to ensure proper internal controls, but also to comply with the legislative requirements of external authorities.
This is particularly important for anything that’s tax-related.
It may seem unnecessary for smaller companies or start-ups to have a formal policy, but it’s something that needs to be done from day one - it helps to shield against a whole host of risks that a growing business can face.
An effective policy will help you to:
- Save money and reduce wastage
- Maintain good employee morale and staff retention
- Reduce legal and compliance risks
The bottom line is that you can’t take effective control of employee expenses unless you have a policy in place. It’s the foundation on which you should build.
What should an expense policy document cover?
The main bases you need to cover are:
- What can be claimed
- How it’s claimed
- Specific limits and allowances
- External compliance requirements
While it can be tempting to try to cover every expense related eventuality, the simpler and more concise that you can make the policy, the better.
An effective approach is to provide a general ethos to go alongside the specific rules and regulations. This can be applied to any costs that they are claiming:
Is it necessary?
Is it reasonable?
Is it verifiable?
Is a strict expense policy more effective than a relaxed one?
Generally, the most effective policies are those that are perceived by employees as being fair. Claimants don’t have to agree with all the rules and limits contained within a policy, but they should accept them as being fundamentally reasonable.
When a policy is deemed as being unfair, it will often be used to justify attempts to ‘game’ the system by submitting reports containing falsified and exaggerated costs.
So, an effective policy is one that finds the ‘sweet spot’ - firm but fair. It should be robust and authoritative without being overly officious or restrictive.
What format should an expenses policy document take?
Whatever form is most effective for your company.
In the past, a policy was traditionally a paper document - printed, copied and distributed. While some companies still use this approach, there is now a multitude of more effective ways to share and communicate information.
Digital and cloud-based tools offer major benefits, allowing finance managers to centrally control and instantly update information across a company of any structure or scale.
With cloud-based management systems, policy reminders and notifications can be integrated into day-to-day operations. We look at this in more detail in the next section of the guide.
But it’s also important to make sure policies are accessible in terms of readability. Employees should be able to easily absorb and understand the information without being required to wade through pages of dense text.
It doesn’t even have to be a document - policy information may be more effectively communicated if it’s in the form of a company video or visual presentation.
How often should policies be updated?
We advise companies to review expense policies on a quarterly basis. It’s a simple task that can be scheduled for the annual workflow of the finance team.
But it’s also one of those jobs that’s easily forgotten with policies not getting checked until problems are encountered. This can be costly if the problems are a result of outdated compliance procedures.
A quarterly check allows spending limits and allowances to be reviewed and for any legislative changes to be catered for.
Now you have a policy - you just need to manage and enforce it.
In the past, maintaining an expenses policy was a constant battle - one which many ended up losing. It was a case of finance teams having to trawl through mountains of paperwork to make sure claims stayed within policy.
It was a mainly reactive system which accepted that expenses fraud would take place and left it to the wiles of finance professionals to try and root out any illegitimate claims.
Now, however, we have digital management tools which allow your policy to become an integrated part of your workflow, with compliance being monitored and enforced at the point of use.
As well as being more efficient, this provides a more cost-effective way to manage expenses. By converting paper receipts into a digital form, processing times can be reduced by around 25%.
Here are some of the most common questions asked about expense management.
What’s meant by a ‘cloud-based’ expense management?
The ‘cloud’ is a general term used to describe the way data and software services can be accessed from an external server. In the past, if we wanted to run software or store data on a computer, we would have to load and store that information on the device.
The cloud is a way for this data to be stored on an external server and accessed from anywhere in the world. So, cloud-based expense management allows you to access the tools you need from wherever you have an online connection.
Cloud-based expense management, therefore, provides businesses with a powerful way to manage and monitor their expenses. Paper receipts are converted into digital form to drastically reduce processing time.
What are the advantages of digital expense management?
In terms of general efficiency, it’s the difference between having to handwrite and mail off a letter, compared to the convenience of pinging off an email.
It provides a much faster, more efficient and powerful way to manage expenses. Moving from an old paper-based process to a digital system reduces processing time and provides much greater flexibility.
The main advantages of online expense management are:
The Webexpenses service is shown to reduce processing times by around 25%.
Configures to meet the specific needs of each company - no matter how complex.
Business travel mileage tracked and recorded to meter accuracy.
Expenses data integrates seamlessly with existing ERP software.
Rich stream of data helps to monitor the efficiency of an expenses policy.
How do paper receipts become digital?
This is done using the Webexpenses expenses app. This allows an employee to use the camera function of a smartphone or tablet device to take a picture of the paper receipt.
This digital image can then be attached to their expense report and instantly uploaded to the user’s account, along with any additional information or notes required.
It means that users can upload an expense report at the point of payment - whether they’re stood in a hotel reception, or sat in a restaurant.
Webexpenses is a leading global provider of cloud-based travel and spend management software to businesses of all sizes. The company’s flagship expense management application provides automated financial processes and reporting for seamless digital workflow across company teams. The company’s product line also includes corporate travel management, invoice processing, online payments, and expense audit. The Webexpenses suite can be used as stand-alone products or bundled for a multi-faceted solution.
With a client retention rate of over 98%, Webexpenses is now tried-and-tested with over 1,500 companies throughout the world, with over 250,000 users. By using Webexpenses, companies typically see savings of up to 10% in travel and expense costs and up to a 25% reduction in processing times.
Webexpenses was founded in 2000 and has offices in the United Kingdom, United States, and Australia.