Last Updated on October 18, 2022 by Ghiselle Rousso
Managing the expenses of your employees is just as hard as developing an effective talent acquisition strategy framework. Both are tedious, time-consuming, and complex processes that if not done right could be disastrous. If you want to manage your employee expenses efficiently, it is important to devise a solid strategy. You should ideally monitor and control the operating costs of the company. Also, while you are at it, consider conducting analytical accounting of expenses.
How to Manage Employee Expenses
There are different ways that can help you manage employee expenses. Here are some of them:
#1. Develop an Effective Employee Expense Management Plan
It’s typical of many small companies not to plan a strategy to monitor employee spending. This is because the amount they are spending is quite small. But you should not make this mistake. It is critical to design an employee expense management plan that should clearly define how employees should spend. It should also brief them about the spending limit and what they can spend on. Here are some basic points that you need to remember when you are creating the expense policy:
- The policy should be simple, concise, and clear.
- Avoid writing the policy in the form of a legal paper.
- No need to include every single expense.
When you are creating an employee management plan, it is vital to involve other teams in the process as well. It will only help you make a better expense policy.
#2. Define Spend Processes
After you have created the expense policy, think about tackling processes. Business spending should include much more than defining the budget and allotting funds to your employees. You must ponder upon setting the expense management processes in place so you may incentivize your workers to manage their spending. The process that you develop must be thorough and methodical.
Before you introduce the expense management process, make sure that it is easy for your employees to understand it. Also, it should be able to walk your talent through the entire process. This will allow the workers to follow the rules diligently.
#3. Plan Your Budget for Every Employee Expense Category
Another way that can help you manage employee expenses is to introduce a detailed expense policy. This means that you must plan a budget for every expense category such as spending on equipment, restaurant bills, and hotel stays. For every expense, you should tell employees how much they can spend. Also, tell them that they won’t be reimbursed if they exceed the limit. There are certain types of expenses that are pre-approved. However, there are some that may require employees to get approval from managers.
#4. Offer Tailor-Made Payment Methods
For controlling employee expenses more efficiently, it is ideal to offer them a custom payment method. You can consider using business expense cards. Why? Well, you can simply load these cards with a pre-defined amount that employees can use. Such cards combine security with flexibility. Employees can use the card just like their debit/credit card. Expense cards will also allow you to monitor what amount your worker has spent and when.
If you don’t want to offer expense cards to employees, you can offer them a virtual credit card. Employees can use this card for their online expenses such as buying plane or train tickets and booking a hotel room.
#5. Digitalize Invoice Retrieval
Whenever an employee uses the company funds, they must keep the receipt. Although collecting the receipt is crucial, it creates a lot of problems for accounting and finance teams. This is because regardless of how careful your workers are, there will be times when they will either forget to receive the receipt or lose it. And when this happens, they will be frequently meeting with the finance team to resolve the issue or finding proof of transactions. So, instead of wasting time obtaining invoices, you can digitalize the receipt collection process. You can leverage the receipt scanning app to do this. This will save the finance teams from data entry. Also, they will be able to do their jobs more efficiently.
Companies usually do whatever it takes to acquire top talent like reaching out to recruitment firms such as best temp agency in austin but pay little attention to employee expense management. It is equally important. You must be really careful when it comes to controlling employee expenses or it may cost your business. You can consider following the aforementioned ways to make it easier for you to manage employee expenses.