Top Ten Tips for Managing Expenses




You can tell a lot about an organization by how it manages its expenses (just look at Britain‘s Parliament…). A well-oiled, well managed expense system suggests a well-oiled, well-managed corporate machine; conversely, companies with reputations for an almost laissez-faire attitude towards expenses (and, let’s face it, there were quite a few of those in the lead-up to the financial crisis…) might well have a few questions to answer if the shareholders start feeling dissatisfied with the quarterly numbers - but at the same time might well succeed in schmoozing key clients out of their competitors’ grasps.

There’s no one-size-fits-all approach to expense management; however, there are some guidelines which can be applied to pretty much any organization which should point towards process perfection and robust employee relations. With this in mind, we’ve put together our Top Ten Tips for Managing Expenses: if you’re not doing at least some of these right, you really should be asking why not…


1. Communication is the key

Your staff can’t comply with expense policies if they don’t know what they are… Anyone with access to company coffers needs to know exactly what’s permissible and what isn’t, and what are the protocols for incurring and claiming expenses. This is absolutely imperative to avoid the rock of excessive claims and the hard place of discontent among your talent.

"Clearly communicate your organization’s policies," advises Gareth Vincent, Senior Director, Client Development, EMEA at Concur. "Don’t fall into the same trap that Westminster did. Expense management often suffers when policies and processes are badly explained by an employer. Assumption is your worst enemy. Make it easy for your staff to play by the rules by giving them as much information about what will and won’t be reimbursed before you even start. 99% of all employees want to comply, so make it easy for them!"

2. Demand specifics

Expense claims need to be as accurate and as complete as is humanly possible, not only for compliance purposes (do you really want a five-figure expense claim that doesn’t comply with accounting norms?) but because without full disclosure you’ll be unable to ascertain whether or not the claim in question is totally appropriate. A dinner check covering entertainment expenses might seem like a reasonable claim but do you know who was at the dinner, and how entertaining those people is going to benefit the organization?

"A receipt can look dodgy because it is vague, and a dodgy receipt is often deliberately vague," says Vincent. "Ensure employees clearly state the business purpose for any kind of expense. Push back if this does not happen. It helps you, and it helps them. If they can’t do it, then what was the purpose of incurring the expense in the first place?"

3. Regular and full audits save precious dollars: fact.

Audit regularly (much simpler when your organization operates end-to-end expense management software, but just as crucial if it doesn’t) to ensure that everything that might constitute employee expenses is registered as such, and that your records are as up-to-date as possible despite changes within the business. For example, if a company mobile phone is allocated to an employee and that employee leaves the company, are you going to be aware that the phone in question needs to be recalled and certain that your liabilities stop the moment the employee stops working for you? Too many companies allow small but cumulatively costly oversights such as this to continue for too long between audits - and recovering small sums like this can often be individually at least as expensive as letting the matter slide, resulting in costs which should have been averted through prompt and proper regular scrutiny.

"You don’t need to audit every day, but find a period of frequency appropriate to your business needs which doesn’t create excessive demands for your staff while creating a sense of confidence that you can track down any single expense stream you’ve initiated," says accounting professional John Coffey. "Pay particular attention to variable repeat expenses such as company cards and phones; these may have been allocated years ago by managers who have since moved on, and without a thorough audit there might be no way of noticing where - or why - these drains on cash flow are afflicting your enterprise."

4. Think culture, think control

How a company deals with its expenses contributes profoundly to corporate culture. Once "expense creep" begins to take hold, and lax oversight allows employees to start considering company expenses as perks of the job rather than tools of the trade, it’s hard to remedy the situation without unsettling the workforce - and of course the more things slip the greater that destabilization might be. Conversely, excessively miserly or unequal expenses policies can create a mindset of under appreciation which is hardly suitable for a forward-thinking and confident organization. Be aware that the impact of expenses goes far beyond the mere financial. If you’re looking to foster a climate of mutual respect and a focus on the business rather than what your employees can gain from it, a sensible and well-managed expenses strategy is an excellent place to start.

5. Design and implement a sensible appeal system

Have a coherent well-defined appeal process for those (hopefully rare) occasions when an employee isn’t happy with the company’s decision to reject or limit expenses. It’s all very well having communicated policy correctly (see point 1 above) but if one of your team is unhappy with the decision that’s been made despite that clarity of communication, you need to have a system in place to minimize that employee’s discontent while at the same time keeping corporate policy intact. If a disgruntled employee comes to you with a grievance that he or she believes to be genuine, it’s up to you to prove them wrong as sensitively and transparently as possible - and that means keeping to well-defined guidelines set long in advance of any potential query.

"In a previous role working for a very large media company," remembers one SSON member who asked not to be named, "two colleagues and I went to a launch event in Argentina and, as usual, covered our own expenses in the expectation of being reimbursed on our return. We then found that the daily expense allowance for South America was much lower than what we had become used to in the US and therefore we’d overspent in total by a couple thousand dollars. I questioned this but was told that ‘that’s the way it is’ and that we would not be receiving full reimbursement. The lack of appeal process meant I had to go over my superior’s head and press hard to get the money I was rightfully owed, which led to considerable tension and a permanent chill in the relationship between my superior and myself."

6. Reimburse quickly

Especially at times of restricted cash flow, many companies feel obliged to push back payments to suppliers as far as possible to free up those extra nickels and dimes. That can create tensions between company and supplier - and when the same tactic is applied to the company’s own employees those tensions can strike right at the heart of good employee relations. Failure to reimburse your employees quickly and accurately can have a devastating impact on morale and productivity: don’t give in to the temptation to back things up for negligible short-term benefit.

"Money is an issue that employees always feel passionately about," advises Vincent. "Don’t let expense claims hang around. Ensure there is an adequate process in place to speedily review a claim, approve it, and return the money as diligently as possible. If an employee has put their own cash on the table for the good of the business, show them your gratitude by getting it back in their pocket quickly. Don’t let them resent you for hanging around."

7. Keep up-to-date with industry norms

Understanding industry norms is rarely anything but helpful and the travel and expenses arena is no different. You might be sitting, head in hands, staring at what you think to be utterly outrageous figures from your expenses team, unaware that your nearest competitors are struggling with costs several times your own. Alternatively you might consider your company’s expenses to be more that satisfactory, ignorant of the fact that you’ve been spending waaaaaaaaaaaaaaay more than your rivals. Expense intelligence is often zealously guarded by businesses but if you can get your hands (legally of course!) on information on your competitors, perhaps through formal benchmarking, it might set your mind at rest - or chill you with the realization that you’re outspending industry norms by a couple of orders of magnitude…

8. Use your line managers intelligently

Giving your line managers, or whoever you’ve appointed as expense arbiters, the power to approve or deny expense claims is one thing; but a truly effective expense management process will confer another responsibility on these individuals, and that’s the requirement to drive efficiencies where possible. Regular meetings purely on the topic of expense management - investigating trends, sharing ideas (and sources of cheaper services) and highlighting problem areas - might not sound like everyone’s idea of fun, but could help save a great many pennies in the long run. And you can ease the extra burden by incentivizing your managers to a degree; for example, by offering a quarterly bonus for the manager who most reduces existing expenses (but be careful not to allow this to impact upon the work that’s being carried out: some expenses are indispensable, and allowing managers to cut them to the detriment of the business is simply too foolish to contemplate).

"Your line managers are your ultimate expense resource," explains John Coffey, "so use them effectively. Make clear that you expect them to communicate regularly about what they’re doing to keep expenses down. One department might have very similar expense issues to another but be addressing them in an entirely different manner. Your line managers must be a forum for the kind of discussions and innovations that can help streamline and optimize your whole expenses management process."

9. Use your reports intelligently

Your reports can be a useful tool when you’re looking to reduce expenses while keeping up the good work which they’re supporting. Analyzing what’s being spent, where and when will benefit you in many areas if you use that information optimally. Too many companies see reports as nothing more than part of the accounting process when, in fact, they can provide you with vital information to help you along the pathway to efficiency perfection. Finding cheaper alternatives to suggested expenses might seem like plain common sense but too often in a hectic professional environment the temptation to take the simplest route is overwhelming. Cumulatively, however, the savings you can generate with a bit of diligent research can be extremely impressive. Do your employees really need to take taxis between HQ and a regular client when good public transport links exist along the same route? Is one airline the best option just because it’s the one that does the most advertising and therefore it’s the most straightforward pick for your time-short travelers? Micromanaging every single expense isn’t cost-effective - but you’d be surprised how many large repeat expenses can be reduced through sniffing around for cheaper options.

"Use your expense reports to do more than just book-keep," recommends Concur’s Vincent. "Look back through them and try to spot trends. Has your company been using a certain hotel regularly? If so, why not call them up and negotiate yourself a better rate? How many times have you used the local sandwich shop to cater for meetings? Can you get yourself a well-earned discount? At worst, they say no. At best, you save some money for bonuses or the Christmas party."

10. Savings are on the cards (and if they‘re not, they could be)

The introduction of corporate cards was a revolutionary development in expense management and it’s easy to see why. For one thing, it instantly removes any of the residual anxiety associated with spending a lot of one’s personal money for business purposes (especially problematic if corporate policies haven’t been made crystal-clear as per point 1 above); for another, it makes reporting and analysis immeasurably easier if all (or the vast majority) of expenses are being run through one set of accounts with homogenous protocols and forms. Think efficiency gains, increased morale and a general sense of corporate well-being.

"Consider implementing a corporate card program. It’s easy to do, and as long as your employees file their claims promptly, they won’t need to stump up any of their own cash. You don’t need to give one to everybody, even a shared card can benefit all employees in an office, and ward off any conflict around using personal cash before it even arises," believes Vincent.