Without a control measure, your team’s spending can quickly burn a hole in your revenues. These expenses may slow down your growth process or affect your operational efficiency. As such, it would be best to have guidelines and regulations to keep them reasonable.
Running a tightrope on staff spending may seem too strict. Besides, it’s a complex and time-consuming process, especially for your finance team. However, it can help cultivate a healthy spending culture within your organization. Managing and controlling your team’s spending is vital. But it’s also crucial to allow them room for flexibility as a show of trust. This can help promote honesty and integrity.
Read below for ways to manage and control your team’s expenses effectively and efficiently.
• Implement Company Payment Methods
Companies typically have reimbursement policies for employee spending. However, it can create a tedious process for the team trying to compile reports for every spending before submitting them to the finance office. It can also make it more complex for your finance team if part of the process is manual. Besides, some expenses can run way above an individual’s financial ability which may become an unnecessary financial burden.
Providing your team with the company’s payment methods can ease such a burden. This step can give your accounts team an easy way to track individual spending. In addition, finance can quickly act if they notice any potential abuse. Your team in the field can easily separate company spending from personal expenditures. As a consequence, it relieves them of possible financial burdens.
One of the most popular methods is giving your team company credit cards. For instance, you can have a multi currency visa card if your operations span across borders. It’s common for credit card companies to provide an option for card limits. Therefore, you can institute a policy on how much your team can spend over a particular period. Putting a spending limit on the cards can also help prevent impulse expenses, giving your finance team a more predictable budgeting process.
You can issue your team debit cards with a set balance to spend periodically. Other ways include arranging for credit facilities with predetermined suppliers. Your finance team can create a vendor shortlist from whom your team is authorized to transact. With a credit account with such vendors, the company can settle the expenses directly instead of the individual settling it on-site and then making a claim later. Such a step can help control costs you incur, such as office supplies and travel.
Overall, company payment methods can help prevent misappropriations that significantly increase expenses.
• Create And Implement Clear And Concise Spending Policies
Having policies that guide spending as part of your financial management is alright. However, these policies should provide clarity and precision to avoid potential reimbursement conflicts. For instance, you may have a policy that says a staff member can get reimbursement for transport expenses. It may not state the parameters of the transport. Thus, an individual can use air transport for a distance suitable for road or rail, yet it wasn’t an emergency.
Your spending policies should cover every detail about spending. The guidelines should also include rules and limits governing a staff member’s spending. Likewise, the team should understand what they can claim and what circumstances warrant a claim. By doing so, you can prevent team members from extravagant spending, thinking they can claim the same from the company.
• Set A Budget For Expense Categories
The team can provide spending documents for various expenses. However, these expenses can eat into your profit margin if there are no particular limits. As such, it would be best to categorize the spending and set a budget for each.
If a team member is on a business trip, they may incur expenses like transport, accommodation, and meal expenses. In such a case, your budget will allocate each cost in its respective category. The individual staff, however, should understand the limits they need to spend per category and what happens if they exceed them. Other spending categories can include client entertainment, training, and office supplies.
You can then make monthly or quarterly analyses from these budget categories and determine if you need to make any changes. Notable changes can include reducing particular expenses or providing different payment methods.
• Digitize And Automate Your Spending Management Process
Manual invoices, receipts, and filing systems can become inefficient due to the human factor. Besides, defaced or lost paperwork can create friction between the company and the respective team members. Tracking previous spending can also become tedious. Similarly, formulating future expense management policies can take more time and effort than it should.
You can prevent all this with a digital system. It can be easier to recall records when necessary. In addition, digitizing and automation can help prevent fraud and abuse. One step you can take to achieve this is getting an expense management system. The system can streamline the reimbursement process. Hence, your team can easily make spending decisions beneficial to the organization.
A robust mechanism to manage and control your team’s spending is good. Otherwise, your business can incur unnecessary expenses. These pointers can help you regulate how your team spends company funds.