Reduce Expenses by Managing Employee Purchases
Consistently distributing top-notch products that sell quickly is only part of the equation in building a healthy bottom line. Detailed accounting and strict cost control are also essential to managing your working capital. A good place to start is with employee purchases.
Review Your Reimbursement Plan
Although every business is different in how employee work-related travel and entertainment expenses are controlled, reimbursement is the most common method. However, it’s important to make sure your policy is clear and monitored in order to prevent abuse, avoid delays in self-reporting, and maintain consistency. Start by setting a strict deadline by which each employee must turn in their reports and/or receipts for consideration.
Then decide what your policy should officially entail as far as what types of purchases are covered and under which circumstances. Good examples to cover include (but don’t necessarily have to be limited to):
- Detailed specifics on which purchases qualify, as well as which types of purchases definitely do not.
- Details on the definition of what business-related travel and entertainment expenses really are. Be sure to include specifics in regards to scope and purpose.
- A list of items and expenses that require preapproval in order to be considered (e.g. plane tickets and other significantly expensive purchases).
- Specifics on what payment types must be utilized in order for the purchase to qualify.
- Instructions on whom to contact if there are any questions or concerns, as well as directions on how the employee must apply for reimbursement.
In addition to making your accounting department’s job a lot easier, you’ll want to make sure you compile, organize, and keep your employee expense data for tax purposes. Always keep the details of your policy posted where they’re easily accessible to any and all employees.
Consider Company Expense Cards
If you frequently have employees traveling for business purposes or otherwise incurring reimbursable expenses on the regular, you may want to consider establishing an employee expense card program. Company credit cards make it easy to keep your accounting records organized by taking a lot of the guesswork out of the process. It’s often easier and more convenient for your employees as well.
Often, managing employee spending is as simple and easy as making sure all the details are well-covered with no room left for guesswork. How will you whip your employee spending program into shape?