Build an Employee Expense Program That Actually Works
Your employee expense program is a small part of your operation – but an important one nonetheless. Providing employees the ability to spend company funds will allow your company to quickly deploy capital to grow. However, by allowing employees to use company money, you run the risk of funds being spent without the proper oversight or approval. For these reasons it’s important to set up an employee expense program that allows for quick decisions and purchases with the proper oversight and controls.
Two Options
When setting up your program there are a few key decisions you should make which will impact the efficiency and controls around spending company money. Do you want to set up a program with pre-approved spend, or with policies and procedures that require employees to use their own money first and then be reimbursed.
Reimbursements
- Establishing a reimbursement program will allow the employees to spend money as needed while requiring any funds spent to be reviewed and approved prior to the employees being reimbursed. This structure puts the onus on the employee to spend funds appropriately or they will not be reimbursed. Employees are less likely to spend on items that may not be be in the best interest of the company, and thus not reimbursed, as it would cost them directly. The reimbursement process results in a higher level of discretion on the employees to make the best spending decisions for the company.
Pre-Approved Spend
- Using purchase orders and/or virtual cards with pre-set limits and/or pre-approved vendors can allow employees to spend funds efficiently while maintaining control over where the money is going. By approving spend in advance, you have full visibility on where the funds are going and can also control the timing of the spend. There are many new card and bill pay programs (e.g. Bill.com, Ramp, and Expensify) that provide out of the box solutions to stand up programs quickly.
Regardless of which option you choose, it is important to clearly define the structure of your program and communicate to your team how funds will be allocated and spent. Below are some additional tips for building the right plan for your company.
- Make your plan simple to understand – The more complicated it is for employees to submit expense reports and for accountants to process/approve them, the more likely it is for errors and frustrations to arise. Work to make data and payments flow seamlessly between employees and employers.
- Clearly articulate standards– The same standards should apply to every employee and every expense, or have clearly defined exceptions when applicable. Take the time to standardize the employee expense program, creating formal policies for both employees and accountants to follow so that everyone stays on the same page.
- Consider using new technology to optimize your program – An employee expense program built from scanned receipts, spreadsheets, and emails makes life harder for everyone. New tech options such as Bill.com, Ramp, and Expensify can provide out of the box systems and processes and integrate directly into your accounting system.
- With technology at the heart of the employee expense program, data does not get lost or disorganized, expenses do not get approved or denied incorrectly, and employees do not have to wait and wonder about reimbursements.
It’s clear that an employee expense program that actually works depends on defining your goals and building the right systems. So what’s the best way to implement, integrate, and introduce a program? Proseer has the answers, along with all the help you need to optimize the employee expense program along with the rest of accounting and finance. Let’s talk – contact us anytime.
