As your business grows and expands, your spending needs to increase to support your business growth. A significant portion of this spending is in the form of employee spend.
A lack of visibility into spend across your business can result in reduced efficiencies and lost profits. One major spend is travel and expenses, which accounts for about 10% of a company budget and is considered the second-most difficult operating cost to control.
For companies to manage their cash flow, strategies and solutions for how to manage employee spend must be implemented and enacted. There are tools that can help.
Manage expenses
In order to better manage employee spending on things like hotels, airfares, meals and entertainment, having a strategy that collates all claims in one place can help avoid overspending and double payments, and even claims fraud.
A simple Excel spreadsheet stored on a shared drive is one way to track employee spending. People are using various ways to make payments, including cash, credit card and transfer. Create a system that requires your employees to show proof of purchase can be simplified using cloud-based storage of transaction data.
Policy compliance
Having spend policies, and ensuring employee compliance is important for tracking spending. While most companies have policies, such as maximum airfare spend or choice of hotels in certain cities, many acts of non-compliance do not come up until after the purchase has been made. Some non-compliance issues are minor and are disregarded, however, these expenses add up. When it comes to business travel, about 20% of travel and expenses fall outside of policy.
For large organisations that are held accountable to shareholders, a technology that blocks employee spend on items that are outside of policy are implemented to avoid issues, such as booking a business class flight when the policy states that the employee is only entitled to an economy class flight.
Policies need to be kept up-to-date and adjusted to include any new solutions or technologies that have been adopted to improve spend management. Having strong policies that are communicated to and understood by employees is key to ensuring that you manage your business spending.
Budget
The key to any financial management system is a budget. Accounting for all spending and understanding the flow of expenses is vital to understanding the health of your business.
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