How to Prevent Throwing Money Away by Monitoring Expense Reports

Nobody likes expense reports. Employees don’t like gathering their receipts and plugging them into an archaic expense report spreadsheet as soon as they get back from an exhausting business trip. It can be even more frustrating for the accounting department when they have to chase down their colleagues who haven’t submitted reports for trips they took months ago and then, when they finally get them, they are rarely complete and accurate. Expense reports are undoubtedly a hassle, but if you aren’t monitoring them, your business is practically throwing away money. Below is a guide that will show you how monitoring expense reports can save your company money.

1. Have a Sound Expense Report Policy

You would be surprised to learn how many companies do not actually have an expense report policy. There are companies that just give their traveling employees credit cards and ask them to turn in receipts. Other companies have a policy buried in an old employee handbook somewhere, but it is neither clear nor is it enforced.

A well-defined expense report policy is essential for any business. Without defined parameters, your company can bleed money through expenses. You need to consult with your management team and review your expense policy yearly or even quarterly if you deal with a lot of expense reports.

2. Publicize the Policy

As noted above, expense report policies are often placed in sections of employee handbooks that no one ever reads. If your employees don’t know the policy, then you can’t expect them to follow it. Employees could be defrauding you through expense reports without even knowing they were doing it.

Post the policy in prominent places. Hang a copy in the break room and on bulletin boards throughout the building. Make sure that you explain the expense report policy in detail during orientation and have new employees sign the actual policy rather than having them sign an employee handbook that contains the policy.

3. Make Sure Reports Are Turned in on Time

Much too often, employees wait to turn in expense reports until after the accounting departments has had to remind them several times. This can cost you money on two fronts. Your accounting department is spending too much time and effort in chasing down expense reports when they could be doing something that actually saves you money instead.

You must have strict rules in place which will force employees to submit expense reports in a timely manner. There should be a concrete limit to the number of days an employee can wait before submitting an expense report. If you really want to streamline the process and save money, make a rule that expense reports must be submitted no more than thirty days after they are incurred. Also, limit your accounting department to issuing only one reminder at 15 days after the expenses were incurred.

4. Take Steps to Prevent Fraud

Expense report fraud is a huge problem in the corporate world. Companies lose tons of money every year because of fraudulent expense reports. Some of these cases involve honest mistakes resulting from unclear policies. If you have followed the steps outlined above, however, this should no longer be an excuse for an inaccurate report.

There are steps you can take to eliminate both intentional and unintentional fraud. All hotel receipts should be itemized. This insures that you are not paying for pay-per-view movies or drinks that are charged to the room. You should also define what purchases require receipts. Set the limit at $10. For any purchase and expense that is over $10, employees must provide a receipt.

5. Ditch the Spreadsheet

Spreadsheets used to be the gold standard for expense reports, but now they just seem clunky and ancient. With today’s mobile technology, there is no need to use spreadsheets for expense reports. All of your traveling employees should have smartphones and you need to take advantage of the technology available to you.

There are multiple cloud-based expense report programs available today. Concur and Expensify are two great examples of programs that can streamline your expense reports. This will not only save you time and money, but it also removes the stress of filing spreadsheet expense reports and frees employees’ time to make you money.

6. Analyze and Publish the Data

It’s a good idea to have someone in your company that is responsible for analyzing expense reports and putting together presentations that explain what they mean. It is important to know what things actually cost and to search for outliers in expense reports. You need to be able to find the trouble spots in the reports and deal with them effectively.

These presentations should be shared with employees in quarterly meetings. Employees are less likely to cheat on expense reports when they are constantly reminded how it affects the company’s profitability. If one person is perpetually submitting expense reports that are borderline fraudulent, you need to point this out in meetings. You don’t have to call them out by name, but make sure to let everyone know that you are aware of what they are doing.

7. Management Must Set the Tone

Your employees are much less likely to behave ethically if you and your management team are constantly engaging in behavior that blurs the ethical line. The management team must lead by example and pay extra attention to make sure that they are beyond reproach. When you have the moral high ground, you can confidently explain expense report ethics to your team.

See also: 4 Habits That Have Become Expensive For an Employer

Expense reports can bleed your business dry if you let them. You need to be in control of every cent that is leaving your corporate bank account. Stop throwing money away, and start monitoring expense reports. You will be surprised at how much money you’ll save.