Expense management is an age-old challenge for CFOs. Ultimately, the goal is to track and control employee spending of company money in an efficient and stress-free way.
The tricky bit is making improvements to existing expense management processes. Many of which can be rigid and outdated.
The idea of shaking up a set system might seem daunting. But with the right approach, making changes doesn’t have to be such a headache.
To make life easier, this article will shed some light on expense management strategies for CFOs to consider.
Jump to a strategy:
- Create an expense management policy
- Automate your expenses
- Carry out regular audits
- Fight against fraud
- Be transparent
What is corporate expense management?
Corporate expense management refers to the processes used by businesses to control and track their employees’ spending on behalf of the company.
Many employees spend company money. This could be on travel, software, food, office supplies, furniture and much more.
It’s crucial companies know where their money is going and who is spending it. So, creating an efficient, easy-to-use expense system is a must.
Below are some of the strategies CFOs can use to effectively manage their expenses.
Create an expense management policy
Step one is to create an expense management policy. This should clearly outline what can and can’t be expensed and apply to everyone in the same way. It must be easy to follow and leave nothing to the imagination.
Companies get to decide for themselves what employees can expense. This means there’s no universal list of expenses businesses should follow. But one aspect that’s consistent is the purpose.
Employees should only use company money (or expect reimbursement if using their own) on purchases that help them do their job. So, when determining what makes the cut, finance managers need to think about which purchases are really necessary.
Once you’re set on your list of expenses, add them to your expense management policy. Your policy should also include a guide on how to claim expenses and how to dispute a rejected claim.
Lastly, CFOs have to consider local policy laws. These may require certain documents to be held for set periods, for example.
Automate your expenses
If you’re still using manual expense management processes, now’s the time to change. Doing things manually means your employees or finance teams are more likely to enter data incorrectly and produce inaccuracies.
Expense management automation removes the risk of human error and takes up less time. With everything done automatically, you can wave goodbye to the tedious spreadsheets and stacks of paper files.
Nowadays, many CFOs use expense management software, which makes the process simpler. Automated expense management software records, tracks, approves and reimburses employees quicker with less human effort.
Such software helps CFOs spend smarter and remain compliant through analytics tools. They can also ensure their company isn’t overspending on approved or unapproved expense areas.
Carry out regular audits
It’s easy to rest on your laurels when your expense management processes are running smoothly. But without regular audits, businesses can face problems like fraudulent receipts and overpayments.
By tracking and evaluating spending over time, CFOs can strategically adjust policy to keep their processes free from extortion. These regular audits help spot minor mishaps before they become major issues.
Fight against fraud
CFOs need to be sure that their employees are submitting fair and honest expenses. It’s not something businesses like to think about, but expense fraud is more common than you might think.
According to research from the Global Payroll Association, fraudulent expenses collectively cost UK businesses around £2 billion every year.
The most common reasons for this are employees exaggerating mileage, taking office supplies for personal use and altering the value of taxi fares.
CFOs can defend against fraud with clear systems.
An unclear expense policy means more opportunities for illegitimacy. By laying out concise ground rules for what can be expensed, employees have fewer loopholes or grey areas to exploit.
Also, we’ve already discussed some reasons why you should automate your expense management processes. And fighting against fraud only adds more weight to the argument.
Crucially, paper expense claims are easier to falsify than digital ones. So, switching to different methods to remove this risk should be explored. Additionally, CFOs can use expense management software to add extra security.
Transparent expense management encourages employees to be accountable for their spending. By developing this kind of culture, businesses can control their expenses with ease, boost profits and limit fraud.
CFOs should listen to department leaders’ feedback on expense policies. Through this, they can discover what works best for each department and potentially unearth some cost-cutting ideas.
Don’t be afraid to offer incentives either. If an employee suggests a functional way the company can save money, reward them with a gift card or bonus.
Lastly, encourage managers to have their say about which expenses are necessary. As we mentioned earlier, determining what should and shouldn’t be expensed is up to the company.
By involving managers from across the business in the decision making, CFOs will gather a more well-rounded idea of which purchases should be permitted.
The importance of transparency
Transparency can be an excellent tool for successfully managing a business internally. But we believe it must project externally, too.
At Privalgo, we are transparent with our clients. We show them exactly how much revenue we make from their trade whenever they make an international payment through us.
We keep no secrets and hide no fees. Instead, we let our service speak for itself.
If your business makes international payments, book a free chat with a Privalgo Foreign Exchange Specialist and see how we can help.