As we all think of New Year’s resolutions that we can realistically keep, better expense management should be one of them.
No business can exist without expenses. They are a necessary burden that employers and employees the world over have simply learnt to deal with. Instead of being a pain though, expenses can be managed in a much smoother way that suits all parties.
If you aren’t yet convinced, then try some of our top expense management tips for 2018.
- Set up a company expense management policy
This is the first thing every company should do. By setting out a policy in a shared document, all employees know exactly what they can and can’t be reimbursed for. It should also highlight preferred suppliers, who are often chosen for their low prices, to help reduce costs.
The document should also be updated frequently. As companies get larger, what has previously worked may no longer be fit for purpose and new suppliers may need to be added.
- Centralize and automate expense management
There are many reasons why you should consider centralizing your expenses. The first is so that everyone gets treated the same and that the company expense policy is adhered to by all. Another reason is that those running the centralized system have a much better overview of what is being spent company-wide. This means that purchasing can be done on a bigger scale and in a more controlled way. An additional benefit of this approach is that companies can see where they stand in terms of liquidity, which further helps to manage spending.
Once this system has been established, it then makes perfect sense for the same department to automate any payments made. Automation not only reduces the risk of errors, but it saves time over a manual approach. By automating expense payments, employees have a better idea as to when they will get their money back too, which will help to maintain morale and motivation.
- Use corporate credit cards
Many small companies fear credit cards and worry that they are an expensive way of getting credit. But that need not be the case. With clever use, credit cards can be a great way to monitor and then control what is being spent when, where and by who.
Corporate credit cards can, for example, be used to extend the amount of time you hold on to your money. From having purchased an item, you then have at least 30 days before you must pay for it. This is time during which you may even be able to invoice for the amount spent, if it’s a service you are buying for a client, for example. This means that just as the money is leaving your account you will be paid back so you aren’t out of pocket.
Corporate cards could even be single use cards so that a member of staff can only use it to buy one item or one type of item (if it’s a recurring purchase). This adds an extra level of security to the process as you know that it can’t be used to buy anything else, even if the card number is compromised.
If you set yourself just one New Year’s resolution, then make it this: invest in a better way of managing your company’s expenses.