Best Expense Management Practices around the worldT&E management is a major focus area for companies, especially in view of the recent economic downturn and increasingly strict regulation on corporate governance. With the right policy, processes and systems in place, significant gains can be made in terms of efficiency and savings, as well as improved compliance. It is understandable that while most of the companies want to adopt the best practice methods to control expenses, it can be hard to understand that which one is the best practice and how to implement it into the organizational framework.
Companies have two main objectives when tackling expense management:
1. Increase compliance with regulation on corporate governance.
2. Reduce costs.
This means tackling 3 main areas i.e Policy, Process and Systems!
a) Policy or clear rules that let employees know which expenses are acceptable, whether or not they need to seek prior approval for expenses, how they should pay, and when and how to file claims. Once a company has asserted the need for an automated expense management process, it usually sets up a project team to define new rules and processes. The organization should ensure that ensure that the policy covers payment methods and set up expense management tools to reinforce the policy, enable senior executives to access real-time data, in order to track traveler compliance and Ensure non-compliance is followed up.
b) Processes for filing expense claims, collecting invoices, approving and reimbursing expenses, reclaiming VAT and auditing. Many of these processes can be outsourced to third-party specialists. The organization should select an efficient expense management system. Typically five steps are involved in selecting an expense management system are Defining an expense management strategy, Setting a budget and specifications, Organizing a request for proposal, Evaluating the different offerings and Negotiating with providers. Companies need to work closely with their provider to ensure that the right processes are in place and fully operational. The more automated and integrated the system, the greater the savings, since employees spend less time filing their expense claims, and the administration is lighter downstream. Among the features worth considering are mobile applications for on-the-go processing of expense claims, Easy-to-use categorization of spend items, currency conversion, pre-populated claims forms, integrating data from online booking tools and corporate payment cards, automated policy checks to warn employees of any breaches and flag the relevant items for managers and auditors, integration with finance systems, automatic reimbursement and simple electronic submission, including scanned receipts.
c) Systems which can be either manual or automated, stand-alone or fully-integrated into other IT systems (e.g. online booking tools and payment card solutions). Companies can choose between web-based solutions managed by service providers, or hosted solutions, where the software is managed inside the company. Broadly speaking, expense management solutions are available as either web-based software or hosted systems.