In the first part of this series we looked at the reckless habits of a company spendthrift and how their tendency to do everything on the fly can derail your budgets. In this second part let’s look at how extravagant spending can create similar problems for your expenses spend…
Confessions of a spendthrift
Chances are you have a few spendthrifts floating about in your business. So, the first step is to spot the early warning signs – multiple cash purchases, frivolous spending and bulk trips submitted in a single claim are just a few. Here are some confessions you may have heard before:
- “I haven’t got a clue what the rules are, so I always try put everything through on expenses. Most of the time they go through fine.”
- “I’m just doing my job, so it doesn’t matter how much I spend each month, does it?”
- “I never keep all of my receipts, so I just guess how much things were and round them up a bit. It’s swings and roundabouts!”
- “I always end up doing my expenses in my own time, so adding a few miles to each journey doesn’t seem unreasonable to me.”
Eliminate the extravagance
Can you relate to any of these statements? Perhaps you’ve heard these confessions from your employees before? And if they don’t say it, many of them are sure thinking it. Whether these habits are a symptom of poor discipline or borne out of frustration from time-consuming spreadsheets, they will be costing your business money. And much of this spend will be under the radar, meaning any data or insight will be lost. So, let’s look at five areas that you can focus on to help eliminate extravagant expenses
- Be clear what’s in, what’s not
Make it crystal clear what can and cannot be claimed when your people are travelling for business. This should be backed by a robust and clearly defined T&E policy. Keep your spending policies updated to be sure limits are reasonable and communicate these to everyone to avoid excuses.
- Centralise bookings
Provide guidelines on preferred accommodation people should consider while travelling on business and consider providing a central booking system. This restricts spend to approved suppliers and keeps all spend visible. If you’d like to adopt a more relaxed approach, tools like Concur TripLink enable you to capture 100% of your employee travel information no matter where it’s booked, providing more insight, more control and more opportunities for savings.
- Let automation take the strain
In many cases employees don’t mean to break the rules but confusion can lead to overinflated claims. With an automated expense management system, controls can be put in place to alert the user and you if anything goes awry. Mileage checkers are built-in to verify journey distances being claimed. And with policy information also built-in, checks are automatically made so your people don’t have to worry about knowing the policies inside out.
- Make everyone accountable
Whether it’s confusion over policy or pure extravagance, some employees can get carried away pushing your guidelines to the max. Yet we know that less than 1% of all expense claims are queried. So make sure everyone is accountable for their actions and can justify their spend when asked to do so.
- Be pragmatic
It’s not always possible nor practical for every single purchase to be supported by a receipt. To avoid the prospect of drowning in cash purchase receipts, consider putting in place a limit on what can be reclaimed without a receipt. Providing certain employees with a pre-paid company credit card that has a suitable limit can also help minimise receipts as well as deter overspending.
Want to find out more?
Hopefully these five pointers have been useful and encouraged you to rein in the spendthrifts in your business. If you want to find out more, download our latest whitepaper: 5 Ways to Improve Control over Spend.