–This article was last updated on 6 October 2021-
No matter how exacting you are in calculating business running costs and a pricing strategy for your output, your profit margin can take a dip from something harder to pin down – company expenses.
The increasing emphasis on remote and mobile work practices means you may have more staff than ever clocking up mileage, hotels and meal bills and a host of other purchases. Is it time to reign all that back, and shave allowable expenses down to maintain your competitive edge?
If you get too prescriptive and strict, it could be counterproductive. Overly rigid expense policies can make staff feel resentful and undervalued. So what methods can you use to balance careful expense control with the need for emotional intelligence in modern business management?
Audit Company Expenses From a New Angle
Any company with ambitions to maintain their profit margins needs to regularly audit company expenses and make adjustments where necessary.
If you are thinking of making some deep cuts into what is allowable, the tendency is to measure based on permitting expenses that directly impact production or customer satisfaction. Anything focused on staff comfort and satisfaction can pass too quickly to the list of items to be slashed.
This is where the emotional intelligence comes in. Can certain expenses be allowed as they keep staff feeling motivated and included, and therefore productive?
In all honesty, is there cash you spend on keeping clients happy that doesn’t actually impact on your order books? For example, treating a client to a round of golf may not be what retains their custom. That same amount of money given to your sales manager for a hotel bedroom upgrade may instead buy their loyalty and devotion.
Engage Staff in Understanding Costs
With clear expense management criteria in place, it’s recommended that you communicate these in a way that engages rather than alienates. It is not a list of dos and don’ts imposed by a boardroom dissociated with everyday life at the company.
If possible, the expense control strategy and policy enforcement should be seen as a collaborative process. Presented appropriately, your cost-cutting can be seen as building for the future, not a panic-measure. You need to manage expenses to ensure that job security and potential salary increases are more realistic.
Make it Easy and Transparent
The best way to give staff a buy-in to controlling expenses – and make them feel more included rather than dictated to – is a cloud-based expense management system. This ensures that you will have done away with the headache of pulling together receipts and trying to account for items days after the purchase was made.
Staff using cloud technology for real-time reporting of their expenditure, including submitted digital receipts, will find it easier and less time consuming. From a company point of view, you can build into the system automated policies and approvals to provide instant answers on what is and what is not a permissible business expense.
This could then be backed-up by an approachable point of contact for staff who want to query decisions or seek clarification.