How Do You Control Employee Expenses?

So your employees have been sent on a mission to perhaps meet a client and do some work for them. They could be an accounting team that is helping a small bank to get to grips with their financial instruments and risk exposure. This trip could last a week or more, so how do you control employee expenses? Most businesses have an expenses policy but if you don’t, you can still make some quick rough and ready policies to help curb overspending. Here are some things to consider.

Make a policy

Expenses policies are not complicated. You simply demand that your employees take the more affordable option when it comes to their accommodation. If this isn’t possible then that is just something you will have to put up with. However, you can curb their spending on meals and snacks. You can set a daily budget for their food needs. Many companies will pay for their employees’ breakfasts and dinner and leave lunch up to the staff. Here is what a simple expenses policy might include.

• Pay for the accommodation of up to $100 per night.
• Always take the more affordable option if possible, i.e. a cheaper room with the amenities required to be comfortable and do their work.
• Food expenses of up to $20-30 a day. This might cover breakfast and dinner. If not, at least it’s half way for most people’s spending habits.
• If personal transport is required, this should be preplanned and agreed upon. Bring back the receipts and expenses can be covered.
• If public transport is the only option, this should also be preplanned and agreed, as well as receipts required upon return.

Follow their spending

You never know what might happen. Your team could be doing very well and they forget that they are here on business. Some teams get ahead of themselves. They get a client to sign a lucrative contract and they begin to spend on champagne, hotels, entertainment etc. by using this kind of business account you can track every single expense they make. Using the Airwallex card, which is backed by VISA, you can not only set a limit to the cost of the overall expenses, but you can track them per person. Go into your account and see what exactly each person is spending on, be it food, transport, luxury goods, leisure, etc. if you spot a problem, you do so in real-time. Call them up and tell them to rein it in. 

A culture of restraint

Of course you could pay for a better hotel, a nice restaurant meal and some other added luxuries, but you should try to implement a culture of restraint when it comes to expenses. Just because they are away from the office, doesn’t mean they should not behave with a business mindset. So always inform employees to be careful about where they spend the company’s money and go for a more affordable option if they can.

Understanding how expenses hit your books

Once expenses have been submitted and approved, it’s worth understanding how they actually get recorded, particularly the difference between an accrued expense and an entry in accounts payable, since the two get mixed up constantly. Broadly speaking, an accrual is a cost you know you owe but haven’t been invoiced for yet, while accounts payable is the formal invoice sitting in the system waiting to be paid. If your bookkeeping doesn’t distinguish between the two clearly, you can end up with a skewed picture of what the business actually owes at any given moment, particularly if you’ve got a team submitting expenses from the road. If accounting isn’t your background, it’s worth reading up on AP accrual before you finalise your policy, so you know what you’re asking your bookkeeper or finance team to track.

Expenses can be a nightmare to control. But hopefully, you now know you have options and get set to work on writing a formal expenses policy. 

Becky

Meet the award-nominated UK lifestyle blogger behind Spirited Puddle Jumper – a mum of three living in South East London! Becky shares the real ups and downs of family life, parenting tips, and lifestyle inspiration, proving that being a mum doesn’t mean you stop being fun or having other interests! Follow along for honest insights into UK family life and opinions on a whole range of topics, from travel and food, to beauty reviews, home and DIY, business and health and wellness.