GB Business likes to give you some tips for expense claim management
If you are implementing an expense management process then take the opportunity to re-launch the travel policy – it is often a neglected and forgotten document that is not used by travellers or finance.
Re-visit the policy to make sure it is accurate and fair. Sometimes the person or persons writing the document never travel so they don’t appreciate some of the challenges of being on the road.
Then implement the policy and rules into your process to ensure you maximise the travel spend. And above all make sure everyone has easy access to the policy.
Review the workflow
The temptation when setting up an expense management system is to look at what the current process is and then try to automate that! However when people are moving paper about they often get into bad habits. Look at the process with a critical eye and try to implement a workflow that is going to be easy for everyone to use and understand.
Harmonisation is key
It is important when implementing an expense management process to design a standard solution for the business as a whole. Then roll out this standard across the organisation and only allow deviations for legal regulations and (if they can be fully justified) locally.
If you simply ask everyone what they want you will end up with a complex system that is hard to follow and maintain. There is a tendency to add complexity to the process to ensure compliance but it can have the opposite effect – if a user finds the process hard to understand or complex to use they will simply find a workaround!
Appoint a Project Manager with the power to make decisions
Travel impacts on every aspect of the process and often several departments need to be consulted; finance, HR, Travel, IT etc. And they will all have their own agenda. Remember you can’t please all the people all the time…. Therefore you need to have a project manager/sponsor with overall responsibility and the ability to make decisions.
Keep it simple for the Employee when submitting their claims
When deciding what information employees need to submit along with their expense claims make sure the information is actually required and will be used.
For example it might be important to get the supplier for hotel spend as this is a high ticket value but do you really need the names of the taxi companies? Tailor the information required to the type of spend.
Who should approve?
Many companies fall into the trap of requiring multiple-approvals for travel and expense spend. Approval before you go, approval for spend A from person A, approval for spend B from person B, escalated approval etc. When embarking on an expenses management process, take the time to look at your approval workflow and approval limits. Then set up a process that requires as few approvals steps as possible to speed up the process and make it easier for all to follow
Try and audit an expense claim before it is paid to the employee!
If you carry out the audit after manager approval/payment and you find there is spend that is fraudulent or outside the travel policy or indeed if the employee simply made a mistake and over claimed on a receipt, it is very difficult to recoup the money after the fact. If you query the employee for any extra information or clarification for an unclear claim there is no incentive for the employee to respond – after all they have already received their money.
Think about compliance
Historically expense management systems were set up with a claim routed for manager approval once submitted and then afterwards sent for an audit by finance, AP, HR or outsourced partner (often all 4!)
However it is much more effective to route an expense claim for manager approval after it has been audited for the following reasons:
- Managers can approve the claim safe in the knowledge that it is compliant with the travel policy rather than having to spend time matching receipts, checking the values against the policy and all the other checks that are required.
- If the audit team sends a query to an employee because they have a claim that is outside the travel policy and it has already been approved by the manager then the employee will often respond ‘well my manager is happy with the spend he/she has already approved it’. This weakens the strength of the audit.
The big mistake
The big mistake when using an automated expense management system to calculate the VAT – Expense management systems can be configured to calculate the VAT based on the type of spend e.g., if it’s a hotel claim in the UK then the VAT rate is 20%.
However a qualified person (not the employee!) must review the receipt to ensure that a) it has been issued correctly and in line with the VAT regulations and b) the goods/services are recoverable.
After all, that hotel invoices entered by the employee might have spend which is not recoverable.
There is no point in having a streamlined expense process and then only make payments once per month. It’s all too easy for employees to miss a monthly deadline.
Ideally you should make payments once per week and ensure the schedule is made known to the employees.
If at all possible try to avoid issuing cash advances to travellers. These are complex to manage and very expensive to handle – both to pay out to the employee but also to handle the inevitable cash returns – sometimes in coins from multiple countries. Instead consider issuing a corporate credit or debit card to the user.