For a company to run smoothly, employees must be able to make the purchases they need, whether that involves supplies for the office or T&E on the road. To keep expenses from getting out of hand, employees should have spending limits, enabling the company to minimize costs and the employees to know the budget they’re working with. This system works extremely well if the spending limits are appropriate and well thought out. The process of setting employee spending limits can be complex, but there are some tips and tricks that can help make this task easier.
Allow for Flexibility
Spending needs may fluctuate from week to week and month to month, so recognize that limits can’t be set in stone. Have a way to alter spending limits at a moment’s notice so that unexpected, but essential expenditures can be made.
Get Informed
In order to set spending limits, you need to know what is being purchased. Ask employees for their opinion regarding necessary spending. And look into the IRS policies when setting limits, particularly on things like per diem rates.
Create a System
Prices will go up, employees will be hired, and spending needs will change. Have a system in place to periodically evaluate and adjust spending limits as needed. Then you can be as accurate as possible without having to worry about things like daily authorizations.
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