How do you manage your teams' expenses?
In the workplace, expense management is always a major source of frustration and tension. This applies both to employees (lack of autonomy, reimbursement processes that take too long, expenses paid out of personal savings) and to managers (budgets exceeded, lack of traceability of expenses, absence of supporting documents). To manage expenses as effectively as possible, it is necessary to establish a clear internal policy and use appropriate software.
What internal policy should be put in place? What software is available to professionals? The range has expanded considerably in recent years, so it's important to choose the one that best suits your company and your teams.
Examine your company's internal practices
Even before focusing on the various existing software packages, it is essential to examine internal practices and identify those that need to be changed.
Expense management: mistakes not to be made
Because of habit, simplicity or lack of time, practices relating to internal expenses are rarely reviewed or called into question, even though they can be the source of a great deal of tension within the company. Among the practices to be avoided, five are particularly widespread:
Mistake n°1: a single card travelling from hand to hand
This is the most common practice, and one that is instinctively followed as the business grows. A business card linked to the company's expenses but which has no designated owner and is passed on to different team members as and when expenses are incurred. There are several dangers with this system: it makes it more difficult to trace expenses, there is a greater likelihood of loss or theft, and employees are not held accountable.
Mistake no. 2: a single cardholder within the team
This mode of operation is the opposite of the previous practice. Here, the payment card is held by a single person who is constantly being asked by his or her colleagues to manage their spending. This practice is far too rigorous and results in a loss of flexibility on the part of staff and over-solicits an employee.
Mistake no. 3: lack of expense control
Some organisations do not set spending limits on their bank cards, or do not indicate a limit for each type of expenditure. This generally means that budgets are exceeded and it is difficult to prioritise expenditure.
Mistake no. 4: failure to manage expense reports
Managing expense claims is a key issue for CFOs. They need to have them in their possession and link them to all expenses. If there is no process for recovering these expense reports, the company will not be able to justify them to the tax authorities. If the employee has advanced this expense, he or she cannot be reimbursed.
Mistake no. 5: personal advances by employees
In many organisations, employees are responsible for advancing money for business expenses, which they are then reimbursed for. This practice can be a source of tension and stress for employees. It is preferable not to use it.
All of these practices are very widespread and are the ones to which we instinctively turn. An internal policy on expense management is needed to ensure that business expenses are properly managed.
Implementing an internal policy
The first point to work on is setting up a budget. Without a budget, it is impossible to manage expenses and empower teams. It is possible to categorise it by type of expenditure, which will give the CFO a clearer picture. Once this budget has been drawn up, it is easier to set spending limits on the bank cards made available to employees. The key point of this practice is to set a budget that limits waste while allowing your employees to succeed in their missions.
Once the budget has been set, internal processes need to be established to allow information to flow and to standardise techniques. Why use the same process for all employees? To increase efficiency and improve communication between the various departments. The multiplication of working methods leads to areas of friction and poor communication between employees. Make sure you communicate this change of process properly and ensure that new employees are also made aware of it. Note that the same internal process does not imply the same method of payment for all employees. You can still diversify payment methods.
Whether we're talking about the budget, the method of payment or the company's internal processes, we're mainly talking about the part that affects your employees, but there's a major part of expenditure that hasn't yet been addressed: expense accounts. These concern your CFO and your finance team. Recovering and sorting expense claims is an administrative and repetitive task, which is why it's important to think about it beforehand to relieve your teams as much as possible. Centralise the retrieval of expense claims and equip yourself with an application that allows your employees to dematerialise them.
Be careful: even if your employees take photos of their expense claims and attach them to their expenses, they are still obliged to provide you with the paper document.
A final piece of advice is to set up anti-fraud systems. The requirement to attach a receipt to every expense makes it possible to view expenses, ensure that the same receipt is not used several times and thus limit fraud.
As we have seen, a number of points need to be put in place to optimise the management of professional expenses. There are many tools and software packages available today to help companies save time and money.
Finding the right tools
The tools on which professionals rely must address two issues: payment methods and accounting management of business expenses.
Payment tools
The most commonly used payment methods are debit and credit cards. They empower employees and ensure traceability of expenditure. However, there are different types of card, so you need to differentiate between them to find the most suitable format.
The first and most common type is the physical payment card. This is the classic format to which all employees are accustomed.
The second form is the virtual card. It works in the same way as the physical card, but is used for online purchases. So why opt for a virtual card? Loss or theft of a standard bank card is common, but this is almost impossible with a virtual card. For software purchases or subscriptions, the physical card offers no particular advantage.
Do you need physical payment cards for your sales staff and virtual cards for the rest of your teams? No problem, many organisations offer both payment methods. In particular, the neobank Qonto allows you to order multiple cards, whatever their form.
We have distinguished two forms of payment card here, but the card used by your employees is not just a bank card, it is usually a business card.
Each business card can have a personalised limit. This makes it possible to manage the allocated budget very precisely and gives employees a great deal of autonomy. There's no need to refer to your manager before making an expenditure. However, this does not exempt employees from justifying their expenditure. They will have to attach invoices to their transactions and give them to the person in charge.
The issues of expense reports and accounting must obviously be taken into account when tackling the subject of managing business expenses.
Business expenses and expense reports
Debit and credit cards certainly make it easier to keep track of payments, but this is not enough for the tax authorities. Every business expense needs to be justified, so an invoice must be attached to it. Today, many software packages allow your employees to take photos of their expense receipts, but they must also return the paper version to you.
What is the point of this software? It reduces fraud, cuts the time spent filling in coupons to justify purchases and centralises information for the finance team.
The reduction in fraud is linked to the obligation to take a photo of the invoice for each expense. This makes it much easier to spot expenditure without an invoice or duplicate invoices.
The time spent on these administrative tasks is reduced because employees are asked for very little information. All they have to do is make their purchases and photograph their receipts. There's no paperwork to fill in when they get back to the office, and no additional documents to bring with them.
Less paperwork completed by employees means less paperwork for the finance team to sort through and read. What's more, the use of a single software package for all employees ensures the same working method and centralisation of all data. This software simplifies the processing of internal requests.
As well as dematerialising expense claims, this software can often be used to export accounting data. You can then transcribe the flow of money into accounting entries.
The Qonto application, for example, lets you take photos of your expense reports, set up personalised labels for each expense and export them for accounting purposes.
Depending on the needs of your company and your teams, it is essential to compare the different software packages on the market. Auditing the needs of all your employees is the first step in choosing the right software. Then all you need to do is conduct a market study and select the most appropriate software.
Article translated from French