Expenses are an everyday part of running a business. Sometimes outgoings will be paid on behalf of an employee in advance, or they’ll be claimed back as an expense.
However, as the cost of living crisis takes a firm hold on everyday consumer finances, employees may not be able to pick up the tab for expenses, or be able to wait to claim their money back. In fact, new research has found that 6.9 million of Britain’s workers use their own money upfront for business purposes, spending £135.22 per payment, around four to five times a month on average.
Connor Campbell, business finance expert at NerdWallet, has provided five tips to help business owners support their employees and operations when it comes to expenses.
Set clear expensing guidelines
It may seem quite obvious, but having an easy-to-find and clearly written expenses policy should help to mitigate against money being misspent. It’s important to let employees know:
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What can be expensed
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What the budget is for any given expense (meals, entertainment, travel etc.)
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Who signs expenses off
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How to make a claim and what evidence needs to be provided (VAT receipts etc.)
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How long it takes for expenses to be repaid
If guidelines are set out immediately, there should be less risk of employees being out of pocket as a result of overspending or going through the incorrect procedures.
Make the expensing process simple
It’s worth doing a regular review of your expenses process and seeking feedback from employees to find out if you can streamline how it runs.
If people are taking too long to do their expenses or if they are struggling – and worse, not able to make a claim – then this should be a priority to address. If there are problems, reviewing the platform or processes used and comparing with alternatives may give you an idea of what works best for your business.
If you can, pay expenses quickly
Not all employees can wait until payday to receive their expenses and the delay may cause unnecessary stress, particularly during a testing financial climate.If your business has the ability to do so, paying employee expenses at the end of the week the claim was made could help reduce the financial burden on individuals.
If you can offer this, you will want to set an expense claim deadline for each week, to ensure expectations are set straight away and any financial holes don’t come as a surprise.
Pay for expenses ahead of time
To ensure employees need not spend any of their own money prior to a work trip, paying for expenses ahead of time through a shared expense platform can help reduce payment worry and keep records all in one place.
Take travel costs, for example. Platforms such as TripActions and Trainline Business allow employees to book their trip on a business account prior to this being signed off by management/finance. The company can set allowances within the app as to what can be booked, then, once it has, approve employee bookings.
Offer a prepaid or company card
For ad-hoc expenses or for client/partner meetings, company cards may be an option to ensure employees can pay for pre-agreed expenses when outside of the workplace. If you’re keen to set a limit, prepaid cards with an allowance may also be another option.
It’s essential to set clear guidelines when paying on company cards and ensure all VAT receipts are kept, so the finance department can keep clear records of all expenditures.
