Expense management is not something you afford to ignore. There are some very high costs that can come from inadequately handling your expense reporting. So when designing and implementing your expense process, make sure to watch out for these common, high ticket mistakes:
Noncompliance with tax law can lead to heavy fines and penalties from the IRS, and in some extreme cases, even the loss of your business. Simple accounting errors, misreporting expenses, and overstating deductions can accidentally lead to your being in noncompliance. Countless companies have had to close their doors because of non-compliance issues and dues. So it is very important for your business to remain compliant with tax law by keeping an accurate account of your business expenses. Properly following through with your expense reporting is a vital part of this process.
Expense management by its very nature is complicated and unpredictable, but this is no excuse for your employees to make mistakes or take advantage of loopholes. These activities can lead to costly expense report fraud.
There are four types of expense fraud to watch out for:
- Mishandled Expenses: Reimbursement requests for personal expenses claimed as business expenses.
- Overstated Expenses: Reimbursement requests for a legitimate business expense, but a for higher amount than what was actually spent.
- Fictitious Expenses: Reimbursement requests for fake purchases often “proven” with fake receipts.
- Multiple Reimbursements: Reimbursement requests submitted on multiple reports for the same transaction.
Fraud costs companies billions of dollars every year. However, with detailed and organized data reports, reviews of expenses, and a consistent review policy of your expense reporting, you can stop fraud.
Mistakes do happen sometimes when you are managing your expenses. Though, if you aren’t careful, these mistakes can lead to heavy costs for your company. Expense reporting software cuts down on the occurrence of human error and can greatly reduce errors so these little mistakes are less likely to cause you big problems.
Poor Strategies And Policies
Running your business effectively means having effective policies in place and continuing to examine set policies to ensure they are efficacious. Staying alert to how effective your existing travel strategies and expense management policies are will both keep you in tune with how your company is operating and aware of necessary changes that could make your business work better and save more money.
Expense reporting gives your business a clear idea where your money is going. So it is imperative that you have a system in place helping you to accurately and effortlessly report and track your expenses so your profits can remain profitable. Investing in quality expense reporting processes is a smart way to keep your business operating at its best potential. Taking the time to implement these programs reduces human error, helps to fight fraud, and keeps you in compliance with tax laws.