Employee expenses are supposed to be a positive part of doing business. After all, if your team is in the field, it means that they’re bringing in revenue for your company. A few minor expenses for food, fuel, and lodgings are worth it in the big picture. But sometimes, those expenses run wild in a company and can seriously drag down your profit margin.
Knowing how to recognize when employee expenses are out of control is important, but not always easy. There’s a fine line between necessary expenses and problematic ones, and knowing the difference can take some time. Identifying fraud is also vital for keeping your business in the black, and can be equally difficult.
The key to figuring out whether or not there’s a problem with your company expenses is to use your expense management software to generate data reports. Start by generating reports on every aspect of your spending – a general overview. Then create reports that are more specific. Look at department spending, individual spending, and even break it down based on trips. Then, look at the following information.
- Start by seeing if a certain employee is spending far more than others. This is a red flag that they may be committing fraud, or that they don’t’ fully understand your protocols where expenses are concerned.
- Is a specific department spending much more than others? This could be normal – sales will travel more than HR, for example. But it’s still worth seeing where your biggest sources of employee expenses are coming from so you can take a closer look at them.
- What about dates? Do they line up correctly? For example, if you notice that expenses are being submitted on weekends – days when they aren’t allowed – you will have found a problem area.
- Also just look at the overall picture. Are your employees spending too much on hotel stays? What about food costs? See what the biggest expenses are so you have a clear idea as to how you need to address the situation.
Once you have all the information you need about employee expenses, the next step will be to figure out what to do to reign in those costs. Developing new policies and procedures is a good first step, but you also have to enforce them. That means educating your employees and setting up safeguards in your software to ensure that only approved claims get through.
You need to cut costs wherever possible and keep your business running in the black. Expenses are one area that might be costing you, so it’s worth giving them more of your attention.