Business moves fast in today’s world, so you need an expense management solution that moves with you. If you hope to remain compliant with labor laws and keep your business under financial control, you’ll need an efficient way to track employee spending and reimburse employees for their business-related expenses. Let’s explore what that means for you and your business.
Put simply, corporate expense management involves keeping tabs on where your employees are spending money on business-related purchases and then making sure that they get reimbursed for them. For everything to run smoothly, it’s a good idea to set up some rules and procedures for how your company will specifically deal with employee expenses management.
There are many reasons why managing your company’s expenses is super important. One of the main reasons is that a good expense management system will make it much easier to approve your future expense claims. That can save you time, money and resources in the long term.
Another huge benefit of efficient expense management is that you can quickly and easily reimburse your employees for any expenses. Time is money. The faster your team can process employee expenses, the more time and money you’ll have to tackle more important tasks.
Proper expense management can also help you set up important budgetary controls, encouraging more responsible spending within your business. This helps you spot any small discrepancies early on so you can fix them before they become bigger problems.
Keeping good track of your expenses will go a long way toward keeping your company compliant with the IRS and other government agencies. Finally, staying on top of your company’s expenses will better allow you to monitor your company’s overall financial health and make better decisions with your company’s resources.
Employers normally have a variety of different types of expenses that they can reimburse their employees for. This typically covers the tools, materials and services that are strictly necessary for employees to do business: things like travel costs for conferences, visits to headquarters and client visits. Also, whenever employees need to buy meals, whether for a business meeting or another work-related assignment, the company can usually cover those costs as well.
The old-school method of business expense management was through paper forms. In the short term, this might even be a cheaper option if your company doesn’t mind spending the time manually processing every employee reimbursement as it happens. But in the long run, that time adds up. The manual method will cost your company much more in terms of labor hours.
Plus, paper forms are far more prone to human error since they can easily be lost, misplaced, or filled out inappropriately. While it might seem reasonable to rely on the old-school approach of paper forms, digital options will be far more reliable and will give you much more bang for your buck.
If you don’t feel quite ready to dive into the world of dedicated expense management software, spreadsheets can be a great compromise. While a spreadsheet will still require a manual effort, they are lightyears faster than paper forms, requiring much fewer labor hours to fill out. Additionally, spreadsheets keep all of the information in one convenient place and easily make whatever calculations you need instantly.
If you’re prepared to take your expense management up a notch, investing in good expense management software will be the way to go. Upfront, it might cost a little more than alternative methods, but the vast amounts of time and resources that you’ll save in the long run will more than compensate for this.
Expense management software also helps eliminate human errors. All of the clumsy little mistakes, typos, and misfilings that can bog down the expense management process and cause headaches. If you have the right software in hand, the whole process can be streamlined. You can feel much more confident that you’ve done everything properly.
While tracking and reimbursing your employees’ expenses is crucial as a business practice, it can take a lot of time and money to do so. When you process your reports manually, fixing your mistakes will take a lot of extra labor just to correct what could have been done right the first time. Even though it’s tempting to view it as an unnecessary expense, it’s truly important to stay up to date with the expense reporting process.
If your employee ever has to use their own money to cover a business expense, then the company owes them that money back. If it takes too long to reimburse an employee, the company could face legal trouble, and the longer it takes, the more trouble there will be. Many employers have been sued for failure to reimburse an employee for business expenses.
According to labor laws, employees are promised reimbursement when they pay an expense on behalf of their company, so it’s doubly important for companies to comply with labor laws, not just for their own sake but also for their employees. When a business is noncompliant, it could mean facing expensive legal action.
Investing in expense management software provides you with a wide range of benefits that just can’t be matched by paper forms or spreadsheets alone.
For one, dedicated software allows you to customize your approval processes in a way that suits your business’s unique needs. That high level of personalization allows you to avoid the tricky pitfalls of a one-size-fits-all system.
Also, a dedicated software program provides enhanced data security. Since physical forms can be subject to misplacement and confusion, it’s far too easy for sensitive data to fall into the wrong hands.
In addition to solving problems with paper forms, expense management software also adds features that make the whole process smoother. Everything from OCR scanning features to digitizing your paper records and automated data entry to mobile compatibility can improve your efficiency and overall performance when it comes to accounting for business expenses.
When expenses occur on a regular cadence, and at a similar or the same price, it doesn’t make sense for employees to submit expense reports. In these instances, companies should use , reimbursements to refund employees who pay out of their own pocket for business-related expenses.
When you reimburse your employees for work expenses, there isn’t necessarily one approach that fits all situations. Your method will depend on the company’s size, the industry you work in, and the types of expenses that your employees will be more likely to incur.
Some companies will choose stipends as a way to cover various work expenses. These stipends can cover a wide variety of expenses: travel, meals, phone bills, and more. They tend to be a fixed amount of money that each employee can use to cover those important expenses as needed. Depending on your company’s needs, a stipend might be tailored to the individual employee’s budget, or, if needed, stipends can be set as a fixed amount for all of your employees.
Stipends do have the potential for downsides, though. For instance, the amount a stipend covers might not be well-suited to your employee’s expenses, either not covering their expenses fully or exceeding their real needs. Both of these situations can cause some tricky accounting issues.
Plus, stipends are also prone to some difficulties when tax season comes around. Even if you, as an employer, don’t withhold taxes from your employee stipends, those funds are usually still considered taxable. If you don’t plan ahead for this, tax time might come back to haunt you.
Understanding when to use expense management or reimbursement is a critical consideration for any business when effective financial management is the goal. Knowing when to use each approach will help you streamline your processes and ensure you get the most from your resources.
Expense management is the most useful approach when your employees incur a cost that is related to business travel or other necessary expenditures. Here are some common situations requiring expense management:
Reimbursement programs, on the other hand, are better used when you want to provide your employees with additional benefits while still keeping control over the costs. The Motus Platform offers many reimbursement solutions, including
When you need to pick a reimbursement program, it will be beneficial to do it deliberately. Take the time and careful thought that a decision like this deserves. You’ll want to ensure that the program you choose is reliable and user-friendly and that each of your employees is compensated fairly and accurately for their expenses while minimizing errors. A little more thought at the beginning can save you a load of time and money when you get the system up and running.
When you’re on the hunt for expense management and reimbursement software, keep an eye on some of these key features.
Pay attention to the reimbursement software vendors that offer the feature that is most important to your business. Choose something that is user-friendly while being more accurate and less time-consuming. It’s also essential that you cover the expenses that your employees most frequently encounter.
The Motus Platform provides your team with coverage for common expenses that your team will need to incur, such as vehicle, device and remote work expenses, plus many more!
Want to simplify your business’s expense management process? The Motus Platform is your answer! With satisfied customers like CVS and Georgia-Pacific, you can trust the Motus Platform to configure accurate reimbursement rates to keep your books compliant and accurate. And when you become a Motus Platform user, the Motus team works hand in hand with your company to calculate rates that benefit your business and your mobile workers. Elevate your efficiency today.
Contact us today or take a virtual tour of the Motus Platform.