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How Can You Get the Most Out of Your Expense Policy?

An estimated 82% of employees lie or file inaccurate expense reports. While there is no way of preventing anyone from knowingly making false claims, companies can do a lot to ensure that most employees comply with the established T& E (travel and expense) policies. 

This reduction in incorrect expense claims shouldn’t be taken lightly. 

Fraud and non-compliance in employee spending claims cost companies billions of dollars every year, so even a slight uptick in policy-compliant submissions should be something you need to pursue energetically. 

Now, how do you go about this seemingly arduous task? 

It all boils down to what you do when you present your expense policy to your employees. Turns out, there are several things you can do as part of the management or the HR team to ensure that everyone understands your spending policies and adhere to them as much as possible. 

Here are a few pointers on how to go about doing just that. 

Setting an example

One of the first things companies need to do to get the most out of their expense policy is to have the senior members take it seriously. Suppose junior employees are questioned over tiny infractions, and senior team members are let off the hook. In that case, the whole system collapses, as an atmosphere of skepticism prevails regarding the expense policy. 

Prioritize transparency 

Many studies have shown that employees tend to violate the expense policy of a company frequently if they think it is unfair. To ensure that your expense policy is respected and followed, ensure that employees are informed as to why each aspect of the document exists. Further, it is vital to get their inputs while creating your company’s expense policy and keep them notified of any change you make to it. 

Simplicity and clarity are key

Make the expense policy as clear as possible. If the employee is on a trip or making a key purchase, and they are left scratching their head as to whether or not some aspect of their expense is compliant or not, they will most likely make the purchase and later on file a report that meets your policy requirements. 

Also, ensure that there is no jargon and that the policy is readily available throughout the organization. 

To ensure simplicity, include a table of contents, bolden the key points, and provide graphs, flowcharts, or photos to illustrate how to best adhere to the policy. 

It is also quite crucial to spell out every aspect of your expense policy. For instance, include:

  • Tools to be used for booking travel
  • How the reimbursements process works
  • The criteria for the approval/ rejection of travel itineraries 
  • Which sites, travel agents, or internal documents/staff are to be referred to while booking travel 
  • Food allowance details
  • Specific flight details, including rough budgets, class, and other limits 
  • Permissible hotel and car rental budget 
  • Timeframe for expense reporting and expected reimbursements 

Keep up with the times

Remember to constantly make adjustments to the expense policy to keep in tune with the present scenario and incorporate factors, such as inflation. For instance, if your salespeople have stopped taking regular cabs and switched to Ola or Uber and are traveling at a reduced price than before, make sure that that change is reflected in your policy. 

However, it is equally crucial to communicate these changes to the employees and confirm that everyone has seen the changes and is fine with them. 

Audit frequently 

If the employees know that the compliance is monitored for each individual and the department, they are less likely to be sloppy with the expense reporting. So, you must conduct regular auditing of spending in terms of the volume and the nature because it will provide you with crucial patterns of what is happening regarding expense policy compliance. 

Automated policy compliance—the most potent way to ensure responsible spending and accurate reporting 

Companies can employ cloud-based expense management software to implement a clear expense policy, simplify the reimbursement process, and seamlessly integrate policy changes into the company’s day-to-day workings. 

Companies can easily set spending limits, automatically flag inappropriate reports/ claims, leverage GPS to determine the accuracy of travel claims made by employees and make everyone aware of tax and other obligations. 

Conclusion

Following these steps while creating, maintaining, distributing, and enforcing your expense policy will go a long way in reducing fraud, misreporting, and other malpractices in your company’s expense management process. 

However, if you are ready to take your compliance to the next level with automation, ExpenseOut will be perfect for you. 

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How expense analytics can help your business —Top 5 Ways

Travel and expense (T&E) expenditures are among the largest controllable expense a company undertakes, so having a good grip on whether the money is well-spent needs to be a priority. 

When a company invests in powerful software with expense analytics that can automatically track employee spending, analyze the data, and provide the management with powerful insights into individual and department-wise spending, it can go a long way in maintaining financial discipline, policy compliance, fraud prevention, and transparency.

Here, we explore exactly how expense analytics will help your business save money and stay ahead of the competition. 

Eliminate non-compliance 

For most companies, poring over endless expenses from employees to gauge patterns of non-compliance is an impossible task. 

This is where expense analytics comes in; the finance team and management can ascertain whether an employee or department is overspending using interactive visual dashboards.

The non-compliance may range from booking a higher hotel class than the expense policy allows, right up to office/department-wide non-compliance for flights or other travel purchases. 

Note that you can make exceptions for valid instances of overspending or non-compliance, such as buying an expensive dinner for a high-profile client. It is worth mentioning that you can identify the volume of non-compliant items, the total value of expenses that are outside the bounds of your company policy, and the type, location, and department of these expenses.

Using this information, your company can understand why there is non-compliance and take necessary action to reduce it. 

Curb expense fraud 

Curb expense fraud 

Usually, integrating a company’s expense policies into the expense management software’s business rules engine can reduce fraud substantially. Every time there is a non-compliant entry, the system either rejects it or asks for an explanation. 

However, the system isn’t foolproof; if there is a collaboration between the expense report submitters and approvers, or if the company’s expense policy has some undetected loophole, fraudsters may bypass the automated policy compliance measures built into the expense reporting software. 

Analytics of expenses can be a godsend while trying to identify and reduce such instances of sophisticated fraud. 

For instance, imagine a company that allows employees to submit expenses under $40 without a receipt. Individuals or groups may attempt to use this supposed loophole, submitting multiple non-policy-compliant entries just under $40. When there is an expense management solution with powerful analytics capabilities in place, these expense claims can be flagged and investigated further to ascertain whether these expense entries are fraudulent or just a coincidence.   

Get vendor discounts

Many airlines, car rentals, hotels, restaurants, and travel agencies provide corporate discounts ranging from a few percent up to 30% for high-value companies. However, your company needs to spend a particular amount with these travel and entertainment (T&E) based companies every year. 

If you use expense management software, the analytics feature—showing spends by type, business unit, location, and vendor— can help you provide evidence to vendors that you are a high-value client and secure steep discounts. 

If you are trying to secure a corporate discount with an airline, you can present the average amount spent per ticket, flying frequency, class, etc.

For car rentals, you can present the total spend per trip, where the renting took place, etc., to demonstrate your value as a customer deserving of a discount.

Meanwhile, you can demonstrate you are a high-value customer for a hotel chain by presenting the average cost per night, number of nights, etc., from your analytics dashboard.

If spending volumes are consistently at the agreed levels, companies can continue getting discounted services from select vendors for their business and leisure travelers.

With its real-time information on whether employees are spending enough with the vendors, the expense analytics dashboard can be used by travel managers and executives to verify whether employees are complying with the agreements made with the vendors. 

Streamline business processes

The analytics feature of an expense reporting tool for employees provides unparalleled transparency into expenses. It also helps compare expenses of various employees, view previous vs. present expenses, identify spending trends on an organizational level, and drill down to review how well everyone spends their travel and entertainment budget. 

With these insights, executives can drastically improve business possesses and bring spending under control across the board.  

Make employees’ lives easier

Leveraging expense analytics can go a long way in reducing the tax burden on employees. For instance, if your expense management software’s analytics report shows that employees are consistently spending money each month on fuel, food, or phone bills, you can integrate the expenses as part of the employees’ salary structure. 

Conclusion

Without a doubt, analyzing employees’ travel and entertainment expenses can give the management profound insights into how to spend optimally. Also, it can give you a glimpse into wasteful expenses, provide transparency in expenses, and allow for better decision-making in the long run.

However, for impactful expense analytics, you need software that can automatically analyze spending, check policy compliance, and present you with actionable insights that give you a 360-degree view of how your money is spent. 

Try ExpenseOut free and experience how effective expense analytics can do wonders for you.