For many small business owners, effectively managing expenses can give businesses a huge advantage and to make the biggest savings, expenditure requires a diligent and well organised approach. However, corporate travel and expenses is an area which tends to be neglected. SMEs need to evaluate their current expense processes and identify areas which are easy to manipulate comments Adam Bamford, Expedite Services Director, Selenity
Using expenses as a personal piggybank
Time and time again, the same claiming patterns appear across numerous businesses. Usually, companies will see four spikes in claims through the course of a year. Easter, school summer holidays, the end of November and lastly the middle of December are peak times and employees can claim up to 80 per cent more than they would during a ‘normal’ week. For example, if an employee who regularly submits claims of around £150 a week were to stockpile their receipts over four or five months, the business could be hit with a £3,000 claim. Storing expenses is one of the greatest challenges that SMEs face, especially from employees who use the expenses system as a piggybank. Of course, employees should be able to easily claim back funds but it shouldn’t be to the detriment of the businesses cash flow.
To get around the issue of ‘piggybanking’ SMEs should put expense policies in place which restrict the timeframe in which employees can submit claims. Setting a limit of one to two months encourages employees to keep up to date with claims and stops them from building up large sums. This helps to regulate cash flow and limits the financial impact on the business.
The submission of fraudulent claims is another common issue. While the majority of employees will submit genuine claims it’s worthwhile double-checking the information being submitted. Whether it’s creating fake hotel invoices then staying with a friend/relative in order to pocket the accommodation allowance. Or claiming multiple reimbursements from the same train journey by submitting the ticket and collection receipt separately. SMEs should ensure that the expense claims put forward are genuine, otherwise money is leaving the businesses needlessly and employees are tapping into tax free money which they aren’t entitled to.
Putting clear policies in place is key to helping employees correctly navigate the expense process but what if your business doesn’t have the time and resources to sift through and check countless receipts?
Utilising cloud technology
Most SMEs have already bought into the benefits of cloud-based applications and use them across various functions of the business. Implementing a digital expense management solution could be an alternative to manually checking claims and offers the opportunity to enhance control of employee spending by automating policy enforcement. This would mean that out of policy expenses would be instantly flagged upon submission. Whether it’s claims which appear to be duplicated or those which go over the spending allowance, the system would raise these issues and return them to administrator for extra justification.