Many small and medium-sized business owners use a variety of methods to pay for company expenses including petty cash and credit cards. They routinely reimburse employees who use their own money to make purchases or cover costs for mileage or personal mobile phone use.
>Each of these methods requires a different set of controls and consolidating information at month-end can be time-consuming and confusing as a result. As the owner, you may need to do this consolidation yourself, or it may fall to your finance director or finance team. Whoever is responsible, what you will want to be sure of is the accuracy of the information as mistakes can be costly (with even small errors adding up long-term).
When employees find it difficult to claim expenses because of confusing information or overly-complicated processes, they are likely to ignore them for as long as they can, potentially putting in claims late and covering several months. This makes them harder for you to track and they may be rushed and thus contain mistakes. Develop a policy that includes clear and simple steps for claiming expenses and define what is allowed and what isn't. Include deadlines so that employees get their claims in with plenty of time for review and payment.
Other than claiming for mileage, employees should provide receipts for their purchases, and these should be included with any claim form. Receipts, as a general term, could also include invoices and bills, for part use of a personal mobile phone for example.
In checking them against the claim form, put all receipts in the same order as they are listed on the form, so they are easier to cross check. Then carefully review each one, making sure the reason for the expense is clearly stated and in line with your company's expense policy.
Check the receipts to make sure they are genuine and haven't been tampered with in any way (this is not always easy given a lot of receipts and invoices are now provided electronically, but if you have any concerns, you should go back to the employee).
If your employee is claiming for part of a bill, perhaps utilities if they work from home, for example, make sure you see the whole bill. If your employee cannot provide a receipt, because it is lost, which can easily happen, they should make a note explaining why it isn't available.
Mileage can be more difficult to check for accuracy, especially if your staff travel for business using their own vehicles. You would need to check every trip for every employee, which is time-consuming. A better way is to choose a mapping software solution and include this in your expenses policy as the one against which all trips will be checked, alternatively by having the postcode for the start and end points of a journey you can ensure that the mileage is accurate.
Your policy should also include how mileage should be calculated; do you want exact miles for example, or should it be rounded up? Then, audit 10% of mileage claims every month, choosing them at random from across your staff.
Whether you are reimbursing employee expenses, using company credit cards, relying on petty cash to cover purchases or a combination of all three, there are downsides.
Paying staff back, if you only run expenses once a month, leaves them out of pocket. This is far from ideal for your lower-paid employees as it could leave them financially vulnerable. Credit cards avoid this issue, but with no real-time reports as to how they are being used, they can leave your business susceptible to overspending and risk of fraud. Petty cash, meanwhile, can be challenging to manage and keep track of. Plus, it isn't a good option for purchasing larger items.
Prepaid business cards are part of Soldo's spending management solution, which integrates with expense management software such as Xero and Concur as well as Sage accounting software, and can be topped up with as much or as little money as you wish, allowing you to manage your company's expenses better.
These expenses can then be monitored using a dashboard that provides real-time reports including specific transaction types, e.g. travel or entertainment, or by department. Also, since staff can use the mobile app to upload receipts, they are less likely to be lost while saving time for the team as they don't need to complete a manual claim form, meaning a more productive workforce.
If you would like more information on prepaid business cards or how Soldo can help with expense management, visit us here, or contact our expert team for further advice.