Travel and entertainment (T&E) is the second-largest controllable expenditure for businesses after employee salary and benefits. Therefore, following expense management best practices such as the procedures involved in reimbursing employees and other out-of-pocket expenses is critical.
Expense reimbursements are one of the simplest methods to steal from a corporation. Even the most well-run businesses may fall victim to expense fraud, but your firm can empower itself with the right tools to combat it.
While you’ll want to modify and adjust the best practices to your unique sector and organization, the recommendations discussed in this article can help you get started on your road to preventing business expenditure fraud.
Implement an Explicit Expense Management Policy
Make an expense management policy that is basic and straightforward. Employees may misunderstand a long and comprehensive text because it is difficult to follow.
When you’ve finished writing your policy, give it to your staff to read and see whether it’s clear enough. Provide information through easily accessible means, such as the internet or a mobile app, so that workers may refer to it whenever they need to.
Employees should also know when they may expect to be paid for their expenditures, which is usually within 30 days or less depending on the firm. Your policy will serve as a benchmark for determining whether to reimburse the expenses or not.
Utilize a Well-defined Expense Reporting System
Give workers a simple way to input their costs if you want quick, accurate reporting. The more spreadsheets, forms, clumsy interfaces, and documentation individuals have to deal with, the longer they’ll take, the more frustrated they’ll become, and the more errors you’ll have to correct.
Companies utilize a paper and spreadsheet-based system to process, pay and audit their workers’ expenditures in conventional expense management. This generally includes travel, lodging, food, and other costs incurred while an employee is on “official business.”
While there’s no reason you should still file handwritten expense reports when there are many simplified expense reporting options in this technological era. Global expenditure report software aids in cost reduction, accuracy, uniformity, and fraud prevention.
Use of More Advanced Tools
In this era of technology, there is a collection of various expenditure management software and gadgets. These are best utilized by world-class companies all around the world. For instance, using software to track mileage expenses may save on mileage reporting and reimbursement costs. With real-time automated GPS tracking and reporting, your company can stay on top of your game.
Use an expense management system that allows workers to file cost claims quickly and easily, especially while away from the office.
Employees may take pictures of receipts with their phones and upload them right away utilizing modern digital platforms. Instead of storing receipts to recover in one time-consuming batch, they submit claims line by line as they occur. This reduces the number of mistakes and missing receipts.
Delegate the Reviewing and Approving Tasks to Managers
Provide a system that makes it simple for managers to comprehend and evaluate all the data they need to make spending decisions that benefit the company. Managers should be familiar with the concept of a deductible business cost and have the power and capacity to approve expense reimbursement requests.
Most importantly, they should be familiar with the standards for maintaining the plan’s accountability. Allow them to approve or escalate claims from their mobile devices, which can streamline the process and avoid delays in authorizing necessary business travel and other expenses.
Make Pre-approvals Mandatory
To guarantee that all expenditures are reimbursed, demand pre-approval for all expenses before any employee spends any money. When employees know their spending is being scrutinized, you might be surprised at how much more careful they are with it. This method seeks a means to prevent expenditures before they are incurred as a cost-cutting tool.
Conduct Regular Audits to Avoid Frauds
All companies, whether big or small, should adopt two best practices. Conduct frequent audits of their expenditure management procedures and do regular checks for suspected fraud. Expense management audits may uncover areas for improvement as well as variations that can significantly raise operational expenses.
The most common fraudulent cost reimbursement activities include; expenses that were incorrectly recorded, fictitious expenditures, overstated expenditures, and paying employees several reimbursements for the same expenditure.
The auditing procedure also aids in the detection of expenditure fraud. A computerized system can detect abnormalities, such as double filing, and therefore assist businesses in detecting and combating false claims.
These are just some essential pointers to limit expense reimbursement. Maintaining tight controls by following these practices might help you avoid more serious difficulties down the line.