The Pain of Expense Reports
Who hates expense reports? More importantly, who hates dealing with expense reimbursements? (Picture me with my arm WAY UP IN THE AIR!) So what is the best way for companies to reimburse employees, maintain standards surrounding spending, and also stay compliant with receipts and documentation? Sometimes it seems like nobody knows what the heck is going on, but with a few simple policies and procedures, you’ll be processing expense reports seamlessly in no time!
Here are my non-negotiable rules for flawless expense reports:
Set up Expenses Policies and Procedures. Skipping this step means both the company and the employee must intuitively guess what the expectation is surrounding spending. The P&P’s need to detail what are acceptable expenditures and what are not. Expectations should be crystal clear.
Use expense tracking software. Expensify or Concur, for example, are great SAAS for facilitating receipt tracking, coding that pairs with your chart of accounts, and easy submission and approval processes.
Capture every receipt. Be smart, be safe, and just snap a photo of every receipt for proof of expenditure. I have run into issues like “I couldn’t get a receipt at the gas pump.” This is not acceptable! We all have smart phones - take a picture of the pump that includes gallons and price to match your card statement. If “The establishment only accepted cash,” you still should have received a receipt. No excuses. No exceptions.
Here are two of the most popular methods of tracking employee expenses:
Company Credit Cards
The company can issue cards to their employees and it is the responsibility of the employee to track receipts, code expenses, and uphold the policies and procedures surrounding usage. To use this method, there are a few things that must be done first, including setting spending limits, making copies of employee cards, and getting signed P&P’s to add to the employee file.
PROS
The burden of available cash isn’t on the employee
Card benefits belong to the company (miles, cash back, etc)
CONS
Liability lies with the company
Less control on purchases
Less motivation for employees to submit reports
Employee Expense Reimbursement Report
Employees use their own cash or credit for company purchases, reimbursement only occurs when the employee submits report, coding, and receipts, it is the company’s responsibility to reimburse approved expenditures. To use this method, the company must have cash on hand to quickly reimburse employees and employees must have an understanding of acceptable expenditures
Pros
Reports are submitted on time, with most receipts and coded to the company’s standard
Unapproved expenses are not reimbursed, per your P&P’s
Company credit is not impacted
CONS
Cash on hand requirements
No credit card rewards
Michelle Lopez
Founder + Advisor
Other options might include things like the Expensify Card, which is connected to your checking account, or the Relay Financial Card, a free bank account set up for employee spending. They both offer card holder spending parameters.
If you’re overwhelmed with creating your company’s expense policies and procedures, that’s ok. These vital documents must be carefully crafted and align with your company’s culture, values, and budget. Drop me a line and I’ll help you find the best options for you and your employees.