5 Ways To Take Control Of Business Expenses

5 Ways To Take Control Of Business Expenses

5 Ways To Take Control Of Business ExpensesEven as companies look to cut costs, business expense reimbursement seem to grow year after year. In fact, average business dining expenses alone have increased 2% in just the last two years. Whether you’re a large business trying to cut costs or a small business looking to institute new expense policies, here are 5 tips for putting a greater emphasis on managing your business expenses.

1. Set Parameters

You should set clear spending parameters for travel expenses. This way, your employees have an expectation of which expenses will be reimbursed and which will not. Your parameters should, however, be flexible enough that expense for legitimate business needs that do not necessarily fall in the normal budget can still be reimbursed.

2. Make Sure Your Expense Report Rules Are IRS Compliant

Your expense report rules should be an Accountable Plan as defined by the IRS. If your company’s policies are not an Accountable Plan, your employee’s expense reimbursements may not be tax exempt. Although the nuances of an Accountable Plan should be developed with the help of a professional accountant or tax attorney, on a big picture level, an Accountable Plan must

  • Allow only for expenses that have a business reason,
  • Allow only expenses that are submitted within a reasonable period of time,
  • Require an employee to repay excessive reimbursements within a reasonable period of time,
  • Require an employee to substantiate expenses with adequate records.

3. Automate Policy Enforcement

Without an automated expense report system, your accounting staff or dedicated audit staff must spend your company’s valuable time and money individually auditing each of your company’s expense reports to make sure that all expenses comply with your company’s policies.

With automated expense report systems, you can program your company’s policies into the systems to ensure that any time an expense report is filed, the any violations of the policies are automatically detected by the system. From there, your review staff can either reject the expense report right away or request further explanation or substantiation.

4. Issue Corporate Credit Cards

Corporate credit cards usually offer great financial incentives or rebates for your employees’ business spending that can quickly add up to a large amount of money. More importantly, corporate credit cards help to reduce expense report fraud by preventing employees from submitting falsified receipts.

5. Use Analytics

With an automated expense report system, your company’s expense data is readily available for your financial staff to analyze without the need for manual data entry. By analyzing this data to identify your employees’ spending patterns, you can further save your company money by entering into preferred vendor relationships or curbing excessive spending in certain expense categories.