Employee expenses, while necessary, can be a hassle for employers to reconcile. No one wants to think that their employees might get a new iPad or go out for a night on the town using company funds, but it can and does happen. Expense account abuse can run rampant — especially for companies with multiple employees who need access to discretionary spending.
Last year, an employee working for the Port of Oakland enjoyed the night of his life, to the tune of $5,000. Sounds fun, but he used his corporate credit card and left his employer the bill. Fortunately, business owners can avoid a situation like these by rethinking their expense management process.
Enable Spend but Maintain Control
Controlling spend before it happens is essential to reining in expenses. Consider an expense policy that clearly outlines what is permitted and what is not. This helps to keep your employees in the know, and be clear about the rules surrounding corporate credit cards. A majority of bloated expense reports are due not to malicious behavior, but are the result of inadequate guidelines on how much employees can spend on specific activities. Corporate policies that detail spending limits create a more comfortable work environment — not to mention peace of mind on the part of the business owner. It’s no longer a mystery how much money one of your traveling sales professionals is going to spend for meals and lodging because guidelines and spend approval have been established in advance.
Updated expense reporting means that managers and executives can view transactions in real time. Employees that know their boss is paying attention to each line item which will make them think twice about making unauthorized or over-budget purchases. Plus, employers can have the ability to allocate or restrict funds to each individual employee in an instant, keeping business operating smoothly and securely.
You can do more than just hope the rules are followed – you can enforce them. Look for prepaid corporate cards coupled with an expense management platform that will help you have control and access to what is being spent 24/7.
Choose Where the Money is Spent
You might have employees who are responsibilities for entertaining clients, meaning that expensive business lunches and dining is a necessity for both current clients and new business. Likewise, your employees might be expected to travel, requiring trips to the gas pump as well as purchasing meals. This leaves a lot of room for inflated expenses and extra company expenditure. But what if you could allow your employees to spend on the necessities, but restrict expenditures to specific merchants? With a prepaid business card solution, employers would be able to control spend by pre-authorizing venues, ensuring that the purchaser has filled up the tank instead of on candy bars from the gas station convenience store.
Protect Your Employees
You’ve probably heard it before: An employee complains about a merchant refusing to accept the form of payment he or she wants to use. To solve the problem, they dip their hand into their own pocket, hand it over, and collect a receipt. The receipt gets lost, and the employee ends up eating the charge because he cannot submit it for reimbursement. In another scenario, the employee submits the receipt only to be forced to wait 4-6 weeks to get reimbursed from the business. Get rid of the expense management hassle by equipping your employees with a prepaid business card solution.
Using a scalable expense reporting system means that business owners are released from a reimbursement process that is unsustainable as their workforce grows. The antiquated expense reporting systems that include petty cash and long reimbursement periods might work for a handful of employees, but becomes cumbersome as more are hired. Establishing expense guidelines from the beginning means tackling fewer tasks while growth is in motion- allowing business owners to focus on scaling up.
Toffer Grant is CEO and Founder of PEX, a New York fintech company founded in 2006 that is a platform provider of next generation corporate cards and expense management solutions for businesses.