Business, Business Expenses

How to approach an employee who’s been splashing out: a small business guide

26 October 2022   |   13 Minute Read
employee overspending

Employee overspending is a sensitive topic, especially when it’s a judgement call. Approaching an employee whose spending has been spinning out of control may feel awkward, but it’s essential as your small business navigates through the current cost of living crisis. In this article, we’ll cover a few key things to consider as well as practical tips for tackling any big spenders on your team:

Does your small business have an employee expense policy?

It’s easier to approach overspending if you have a clear expense policy and the employee in question has actually contravened it. In a situation like this, the overspending is black and white: there was a rule and they broke it. That’s a much simpler conversation than if an employee overstepped on what you thought was a mutual (but unwritten) agreement of what is and isn’t okay.

But having an expense policy is only part of the equation – you have to make sure that everyone is aware of it, knows where to find it and understands exactly how it applies to them. If you don’t have an expense policy, now’s a good time to draw one up.

If you have an expense policy, you should approach your employee as you would if they breached any other company policy, taking into account the degree of overspending and the value that this particular employee holds for your company. If your expense policy doesn’t clearly state what the process is for dealing with overspending and the potential consequences, you need to add those in right away.

Where’s the line between employee overspending and theft?

There’s overspending, and there’s overspending.

Employees have been caught spending hundreds of thousands of pounds of company money on their gambling habits. In such cases, it’s not so much you who needs to approach your employee as the police.

Even in less extreme cases, when the contravention is clear and the spending completely unnecessary, employee overspending may spill into a matter of theft.

If the situation is this serious, it’s critical that you seek solid legal advice. You may well find that the overspending is a disciplinary – if not criminal – matter. In which case you’ll need to stick to your company’s disciplinary policies, with legal advice at every step.

How can you approach employee overspending sensitively?

In most cases, however, employee overspending has more to do with them going a bit too far with Travel and Entertainment (T&E) expenses. It’s these sorts of situations that require a particular sensitivity.

If your employees are working hard and travelling around on behalf of your company, they may feel that a certain level of comfort (and fun) is justified. Perhaps they’re meeting potential clients and spending just a bit too much on them.

If you value your employee and you don’t want to demotivate them, then the best thing you can do is redirect them to your company’s expense policy. If you don’t an expense policy yet, draw one up and roll it out to your entire team making sure everyone understands what the rules are going forward.

Explain to your employee that you trust them to represent the company in the best possible way, that you appreciate everything they do, but that your small business budget simply doesn’t stretch to their current level of T&E spending.

Make it clear that you don’t want them to feel hard done by, or undervalued. Work together towards a solution that keeps their overspending under control, while making sure they still feel empowered to pay for the things they need to get the job done.

What’s the best way to prevent employee overspending?

The best thing you can do – alongside your expense policy – is to implement a company spend and expense management solution that prevents overspending in the first place.

With Soldo, you can give every employee their own prepaid expense card. You set the spending limits and categories, control where spending can take place and which budget those funds come out of. By setting those rules within Soldo, you can actually be relatively hands off – giving your employees the freedom to spend company money within reasonable limits and according to your expense policy without feeling like they’re being micro-managed.

Find out more about getting ahead of employee overspending with our flexible spend management platform.

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