Corporate travel is one of the largest expenses for businesses worldwide. Statistics show that by the end of 2022, businesses will have spent $1.7 trillion on business trips.
As long as your business requires employees to travel for work or spend money on company expenses, you’ll want to make sure you have a system to manage and track those costs.
If you’re a busy employer, you may not give expense management the full attention it deserves. Ignoring expense management will make it difficult to stick to your budget and save money on employee expenses.
Luckily, there are several easy ways that can make tracking employee expenses a breeze. Keep reading to discover some of the best methods for doing so.
Create a Plan for Employee Expense Management
The first step in effectively managing employee expenses is to create a plan. This plan should include the procedures you’ll use for approving expenses and how and when employees will submit their expenses.
If your business doesn’t have an expense management policy in place, now is the time to create one. Your policy should cover everything related to expenses.
It should cover what expenses you allow and how employees submit their expense reports. Creating an employee expense policy will ensure that everyone is on the same page regarding managing expenses.
Set a Budget for Various Expense Categories
Once you have a plan for managing employee expenses, the next step is to set a budget. This budget should include different categories for different types of expenses.
For example, you may want to create a separate category for travel expenses, dining expenses, and office supplies. Setting a budget for each category will help you track employee spending and ensure that it stays within your set limits.
You may also want to consider setting individual budgets for each employee. This can be helpful if you have employees who travel frequently or have a higher level of spending. Individual budgets will help you monitor employee expenses and ensure that no one is overspending.
Give Your Employees Suitable Payment Methods
One of the best ways of tracking and managing your employees’ expenses is to give them customized payment methods. You can consider using business expense cards at this stage. You can load the cards with a specific amount that your employees will use while on work duties.
The main advantage of these cards is that they allow you to set a specific spending limit. They make it easy to track your employee expenses.
You can also opt for virtual credit cards, which employees can use for online payments. They can use the cards to book accommodation, buy tickets, or pay for their software subscription.
You can use a secure internet platform to control the card in real-time. You’ll also get detailed insight into the online purchases that your employees make.
Go Digital in Invoice Retrieval and Submission
If you want to track employee expenses better, you should do away with physical receipts. Your employees may lose the receipts, making it difficult for your finance team to explain some payments.
The best thing to do is to digitize invoice retrieval and submission. You can use an app that allows employees to scan their receipts. Every time they incur an expense, they’ll scan the receipt, and the data will go directly to the finance team.
Review Employee Expenses Regularly
Even if you have a plan and budget for managing employee expenses, it’s still important to regularly review employee expenses. The review will help you spot any potential issues and correct them before they become bigger problems.
During the review, you should examine the data on employees’ spending. If you see that one of your employees is consistently spending more than they should, it may be a sign of a problem.
Reviewing your employee expenditure may also help you track fraud in expense reporting. Tracking fraud is vital because 85% of employees admit that they lie about expense claims. You should look out for fictitious expenses, multiple reimbursements, and overstated expenses to identify fraud.
Get the Right Employee Expense Software
The right software will make tracking employee expenses easier. You’ll find many expense tracking solutions on the market today, giving you plenty of options.
When selecting your employee expense management software, it’s important to look for a solution that easily integrates with other systems within your business. You should also choose a platform that has robust reporting features. These features will ensure that your finance team gains detailed insight into employee spending.
One of the best options for managing employee expenses is EAP software from Iinsight. The software has an employee expense feature to track your employees’ or contractors’ costs. You can also get EAP software to simplify data entry, especially when recording data related to employee expenditure.
This software will work well with your employee tracking software, which allows you to track your employees’ activities when at work. It will help you determine the right amount to reimburse your employees based on the number of hours they spend on work activities.
Make Your Employees Accountable
When it comes to tracking employee expenses, one of the most important things you can do is make your employees accountable. If you don’t hold them accountable, they may be less likely to submit accurate expense reports.
There are several ways to make your employees accountable for their expenses. One is to ask them to submit receipts for all their expenses.
You should also require them to use corporate credit cards for all business expenses. This will allow you to track their spending and ensure that they only incur business-related expenses.
You’ll also need a clear set of policies and guidelines for employee expenses. These should cover the maximum amount you will reimburse for the various expense categories.
Managing and Tracking Employee Expenses Made Easy
Tracking employee expenses can be a challenge for any business. However, by following the tips above, you can make it easier to manage and keep track of employee expenses. Tracking expenses will save you time and minimize errors and fraud in employee expense reporting.
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