No one wants to think that their employees might upgrade their iPads or woo a love interest on the company dime, but it does happen. Expense account abuse can run rampant — especially those that have multiple employees that need access to discretionary spending.
Last year, a Port of Oakland maritime director managed to spend nearly $5,000 at a local strip club. While that might sound sensational enough on its own, it gets worse: He charged his nightlife activities to his employer. Fortunately, business owners can avoid a situation like these by rethinking their expense management process.
Here are five ways to protect the company cashbox:
1. Set Spending Limits
Controlling spend before it happens is essential to reining in expenses. Many inflated expense reports are not due to malicious behavior, but are the result of inadequate guidelines on how much employees can spend on specific activities. Corporate policies that detail spending limits create a more comfortable work environment — not to mention peace of mind on the part of the business owner. It’s no longer a mystery on how much money one of your traveling sales professional is going to spend on meals and fuel on the road because allowances have been established in advance.
2. Restrict Merchants
Part of your employees’ job might be to entertain clients, so expensing business lunches is a necessity. Likewise, your employees’ might be expected to travel, requiring trips to the gas pump. This leaves a lot of room for inflated expense accounts and extra spend. But what if you could allow your employees to spend on the necessities, but restrict expenditures to specific merchants? With a prepaid business card, employers would be able to control spend by pre-authorizing venues, ensuring that the purchaser has filled up the tank instead of on Snickers™ bars from the gas station convenience store.
3. Protect Your Employees
You've probably heard it before: An employee complains about a merchant refusing to accept the form of payment he or she wants to use. To solve the problem, they dip their hand into their own pocket, hand it over, and collect a receipt. The receipt gets lost, and the employee ends up eating the charge because he cannot submit it for reimbursement. In another scenario, the employee submits the receipt only to have to wait 4-6 weeks to get the money back from the business.
4. Create Oversight
Updated expense reporting means that managers and executives can view transactions in real time. Employees that know their boss is looking over their shoulder will think twice about making unauthorized or over budget purchases. Plus, employers have the ability to allocate or restrict funds to each individual employee in an instant, keeping business operating smoothly and securely.
5. Build a More Sustainable Future
Using a scalable expense reporting solution means that business owners are released from a reimbursement process that is unsustainable as their workforce grows. The antiquated expense reporting systems that include petty cash and long reimbursement periods might work for a handful of employees, but becomes cumbersome as more are hired.
Establishing expense guidelines from the beginning means tackling fewer tasks while growth is in motion- allowing business owners to focus on scaling up.
Learn more about your expense management options by downloading PEX's Expense Management Guide.