Expert's Corner

Are your Employees' Spending in Accordance with your Expense Policy?

Posted by François Duchesne on Jul 24, 2017 10:48:21 AM
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Monday night, 6 p.m.

After a common day spent at the office, one of your sales representatives is informed at the last minute that he must leave for Toronto the same evening. He is in fact meeting a client there for breakfast the next day. After buying his plane ticket, he decides to book a hotel room where the company has a discount. However, the receptionist is not able to apply it due to a computer bug. Hurried, the employee decides to pay the full price, being $250 instead of $180.

Meanwhile, in a fancy Montreal restaurant, another employee orders a bottle of wine, at a price well above the policy. He claims that he wants to seduce a client.

At the same time, his colleague reserves a first-class seat for his next trip to New York.

Keep Your Money

For a multi-million dollar business, an unnecessary expense of $50 to $100 may seem of little concern. In any case, it should not happen. A business’s core objective is to make money, not losing it. As a matter of fact, any waste, as little as it can be, must drive to a twinge of regret for a manager. 

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The same also applies for employees who spend time and efforts daily aiming at expanding and growing the business.

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The problem gets worse when your employees need to travel every week. Indeed, they can spend, without your consent, more money than required. Your losses can quickly top thousands of dollars for a single week. In a year, we talk about hundreds of thousands to millions of dollars.

There was a time when business managers were buying what the employees needed themselves. However, by decentralizing the power purchase, it became very difficult to keep an eye on all expenses, even when establishing a business policy.

“40%-50% of employees book outside of guidelines or company policy”

Have your business policy gone unnoticed?

Unfortunately, in many cases, this policy is ignored for a range of reasons, as employees:

  • do not have a clue about it;
  • do not know where to find it;
  • prefer to reserve their trips from their own mobile devices (such as smartphones or tablets);
  • plan their travel depending on their needs and not those of the company, especially in the case of rewards programs. Indeed, your employee will be rewarded by his airplane company, not your policy. 

As a matter of fact, many employees end up seeing a business policy as complicated and unpleasant regulations. How is it still possible to encourage them to comply with it? Providing them with tools which enable easy reservations for their travels and submission of expense reports, is a simple solution.

Prevent or cure?

You could ask your accounting department to strengthen expense reports’ verification, but the expenses would still have already been incurred. Wouldn’t it better to be informed on how your money will be spent prior to the purchase? To avoid your business policy to become a fictive and unclear concept, you may wish to consider to automate your expense management by trusting technological solutions’ reliability.

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You will then get control on your business’s financial health!

Should you want to explore ways to improve your expenses management, find out more about our expense management solutions.

Topics: Finance