Establishing a robust expense management strategy is crucial for maintaining financial health and efficiency within your organisation.
While the task may seem daunting, especially when starting from scratch, the benefits far outweigh the challenges – and it’s actually much easier than you think!
If you work in the finance department, you've probably experienced the challenges that come with poor expense management systems. Manual processes, lack of automation, and unclear policies – all leading to a myriad of issues, such as:
- Over-budgeting and overspending: Without a clear system in place, it's easy to lose track of expenses, leading to over-budgeting or overspending in certain areas.
- Expense fraud: Manual processes are more susceptible to fraud or errors, as they lack the checks and balances that automation provides.
- Inefficient reimbursement: Let’s face it, reimbursements should never happen! They are time consuming for the finance team and affect employee morale and productivity.
- Lack of visibility: Without a centralised system, it's challenging to gain insights into spending patterns and make informed decisions.
The good news? By implementing automation, clear policies, and regular audits, your business can streamline it’s expense management processes and reduce the risk of financial mismanagement.
Let's walk through it with some handy examples:
Get to know your expenses - Begin by identifying where your company’s money is going. Examine all receipts and invoices from the past six months and categorise them into groups like travel, stationery, and technology.
Set clear rules - Define what counts as a business expense e.g. state that only meals during business trips, not personal dinners, are reimbursed. Also, clarify the reporting and reimbursement process (if you’re in need of a template, we have an expense policy template handy for you to reference).
Provide pre-allocated budgets - Provide your employees with the budget beforehand, preferably using an all-in-one solution (like Budgetly) that also provides physical and virtual cards. This helps team members understand their spending limits and encourages responsible expense reporting - all without asking employees to shell out their own cash first!
Keep your strategy fresh - Regularly review and update your plan. If you notice a surge in travel costs, it might be time to consider virtual meetings instead of on-site visits.
Teach your team - Share the strategy with your team. Conduct a workshop to explain the dos and don'ts of expense reporting.
Set up a pre-approval process - Request pre-approval for significant expenses. For example, if a team member needs to purchase a new laptop, they should get it approved first to avoid overspending, and this should be accounted for in the budget. Budgetly makes it easy for your employees to request funds within a budget, and for you to approve or disapprove them in just a few clicks - watch a demo here.
Go for real-time reporting - Implement a system that allows real-time expense tracking. This lets you immediately spot if someone, say, books a first-class flight instead of economy. Having real-time visibility on all transactions and getting notified if an employee attempts to spend outside of a budget’s rules will make your management much easier.
Foster a sense of responsibility - Encourage responsible spending. You could hold regular discussions on expense policies, and recognise team members who consistently adhere to them.
Audit regularly - Regularly review expense reports for compliance e.g. check whether the reported business meals align with your company's policy and if the same vendors are always used.
Check in on your vendors - Take time to evaluate your vendors. If you notice a supplier consistently raising prices, it may be time to negotiate or find an alternative.
Remember, a meticulously planned and managed expense strategy can result in significant savings and smoother financial operations.
So, ready to see how Budgetly can help your finance team take back control of business expenses?
Simply schedule a time and we’ll be in touch for your live walkthrough of the Budgetly platform.
Need to audit your current expense policy? Grab a coffee or tea and take 5 mins to find out with our free expense process audit!