One of the biggest headaches for small business owners is the problem of employee expenses. SmallBusiness.co.uk offers some top tips to managing them.
By Rich Wagner, CEO of Advanced Payment Solutions
One of the biggest headaches for small business owners is the problem of employee expenses. Cautious employers are right not to hand out company credit cards with revolving credit limits for their staff to take liberties with, but employees are also within their rights to claim promptly for legitimate company expenses.
Expenses are an emotive issue – and the fudge usually ends up being disgruntled employees having to pay company costs out of their own pocket and claiming back their expenses at the end of the month. This is not only time-consuming, but also difficult for the employee and employer to manage and potentially damaging for the working relationship. In addition, business owners have no idea how much employees are spending until they receive those unexpected nasty surprises on the end of month expenses forms!
Top tips for managing employee expenses
• Communicate your expenses policy clearly and simply, and remind employees about it regularly. Employees need to know what they can claim, when and how. Try to keep bureaucracy to a minimum and encourage employees to ask questions!
• Enable your employees with their own expenses card. Give responsibility to the team, from junior members through to managers and encourage them to budget accordingly and take ownership of financial matters.
• Reduce the need for forms, receipts and paperwork by making sure your employees know about the limits on the card and the agreed areas of expenditure. Stick to a clear policy and tell your employees if it changes.
• Think about fuel and business entertaining as potentially high-risk areas – make sure card users know whether they can spend on fuel and food/drink (especially alcohol) or whether these areas are off limits. You can even block certain type of purchases if they are not permissible under your policy for extra control and risk management.
• Make sure your employees know you or your finance director is monitoring the different card accounts regularly to prevent potential abuse of the system.
See also: Tax reclaims on fuel expenses to end?