What’s best practice for managing company spending?
No company wants to waste money, and all well-managed businesses will have policies in place so that they may effectively control their expenses. They will make sure the accounts are kept correctly, which will raise a red flag if spending is out of control or the profit margin is not what it should be.
Product and manufacturing firms soon learn not to over-order stock, although bulk buying can be a positive move. Similarly, service-based firms will tightly control staff salaries and utilisation. However, one routinely neglected area is that of coping with employee expenses.
Define a clear list of what employees can claim
You would reasonably expect staff to behave appropriately with their business expenses. However, some will be ‘creative’ and may try to claim for questionable items. Like it or not, there will always be the occasional rogue team member who will buy something for themselves on company expenses or use company cash to tide them over during a rough patch.
It is therefore essential that you define precisely what staff members can claim for. Examples may include rail travel (but not perhaps first-class); hotel costs and other travel expenses when working away from the office; and subsistence up to a specified daily limit or within a geographical location (for example, the UK). This makes it easier to reject any expense requests that do not fall within the policy.
Set a cash limit
You can always set a monthly budget, which can be different for each employee. Knowing the maximum budget each month for expenses helps enormously with cash flow. One of the problems with employee expenses is that you don’t see how much has been spent until after the event. At least if you have set a limit, then you can plan for a maximum level of expenditure.
The simplest and most effective way to set a limit is by issuing each employee with a prepaid business card. Using a card such as those available from Soldo is an effective way to control company spending insofar as expenses are concerned. With prepaid business account provider, Soldo, business owners and finance teams can hand out company cards to individuals and teams that need to access company funds. The card starts with a balance of zero and is topped up via the Soldo dashboard.
You can top it up with funds to the required level, inherently defining a spending limit. This can be different for each member of the team. The card can then be used to make purchases or to withdraw cash from an ATM, so it works like a debit card. Each transaction is then automatically uploaded to the dashboard. This means that the accounts department can instantly see where and how the money is being spent. The employee doesn’t need to keep hold of all the receipts or put in a claim at the end of the month.
Maximise expense efficiency
In doing expenses the ‘old-fashioned way’, employees will need to fill in an expenses form. This will take time to look through all of their receipts, fill in the form and work out the claim. Then someone in accounts (or the business owner for smaller businesses) will also have to go through all the forms, work out the VAT, and record the information in the accounts system.
When you use our prepaid company cards, the information is automatically recorded via the dashboard. The data can be exported so that the accounts team has a detailed view as to expenditure by type, team member and so forth. Our dashboard integrates with major expense management software solutions such as Sage, Quickbooks and Xero. The result is a dramatic reduction in valuable staff and accounts team time spent on managing expenses.
Keep hold of the purse strings
Traditional expense management approaches can lead to conflict wherein some claims may be rejected. This has an inevitable adverse effect on team morale. Contrast this with the Soldo approach in which you retain full control over the purse strings at all times. You can not only define but immediately enforce spending policies for each team member, from geographical and expense type restrictions through to monthly limits.
If you feel that your current approach to expense management may benefit from prepaid corporate cards, contact our expert team for further information and advice.