If you're a business owner, it's your responsibility to make sure that your employees are spending company funds appropriately – no matter how big or small your organisation is. It's not enough to simply trust that they won't steal from you; you have to be able to track their expenses efficiently.
In this guide, we'll talk about why it's important for business owners to know how much their employees are spending and how they can keep track of employee spending. We also share what methods of employee spend tracking are most effective.
Table of Contents
- How to Keep Track of Employee Spending
- Why is it Important to Track Employee Spending?
- What are the Benefits of Employee Spend Tracking?
- What Software Can You Use for Employee Travel Spend Tracking?
- How to Get Started with Expense Tracking
How to Keep Track of Employee Spending
You can keep track of employee spending by using a spreadsheet to track expenses, but it's not the most efficient method. You'll have to keep manually entering the data, which can become tedious and error-prone. If you want an easy way to keep track of your employees' spending habits, consider using an expenses mobile app or cloud-based software that automates the entire process.
This allows you to automatically upload receipts from your phone's camera roll or snap a picture with its built-in scanner – no manual entry required. You can also organise them into categories based on location or type of purchase and add notes about each transaction.
Why is it Important to Track Employee Spending?
Tracking employee spending is a critical part of any organisation's financial management process. It allows you to:
Reduce the time and cost of manual processing
When you have accurate data on how much your employees are spending, it's much easier for your finance department to approve expense reports quickly. This helps reduce administrative costs and frees up valuable employee time, which can be used elsewhere in your business. Plus, employees will be reimbursed a lot faster for their out-of-pocket expenses.
Ensure compliance with internal policies
If your company has strict policy rules about what kind of purchases employees can make or where they can travel, tracking those activities will ensure everyone follows them, or at least knows what's expected of them before making a purchase.
Ensure compliance with external regulations, like tax laws
Tracking expenses ensures that all taxes due on those expenses are paid correctly and that your company stays compliant with rules and regulations.
What are the Benefits of Employee Spend Tracking?
Now that you know just how important it is to track employee expenses, you no doubt understand that there are plenty of benefits in doing so.
The benefits of employee spend tracking are:
Saving money on travel expenses
Identifying issues with travel policy
Reducing employee expense fraud
You can find more detailed explanations on those benefits, including how to make the most of each benefit, below.
1. Saving money on travel expenses
You'll be able to see where your employees are travelling and what they're spending on their trips. This can help you save money by ensuring that only necessary trips are taken and that employees don't spend company funds frivolously.
2. Identifying issues with travel policy
If your employees are taking more expensive trips than they should be, it's possible that they're not following your company's travel policy. The monitoring software will help you identify any potential loopholes or policy issues that may be negatively impacting your bottom line.
3. Reducing employee expense fraud
If an employee is fiddling with their expenses and stealing from the company, it's likely they will be spending more than they should be and this may be reflected in their expense reports or credit card statements. With proper monitoring tools in place, you'll be able to spot suspicious activity quickly so that it doesn't become a bigger problem in the future.
What Software Can You Use for Employee Travel Spend Tracking?
The best way to track employee travel expenses is with a cloud-based software that also has on-the-go access in the form of a mobile app. This type of system allows you to access, manage, and analyse your data from any location at any time.
The difference cloud-based software can make
Cloud-based software also makes it easy for managers to monitor spending habits by allowing them to view reports in real time. If employees are spending too much money on one expense category or another, their manager can take action immediately. Manual systems, on the other hand, would require waiting until the end of the month when all of the information has been collected and compiled into report form.
The cloud-based software platforms available
There are a number of cloud-based expense management software available, including Webexpenses, SAP Concur, Spendesk, Pleo, and ExpenseIn. We've written a handy guide to each of these platforms to help you determine which one is best for your business needs.
How to Get Started with Expense Tracking
You can get started with employee expense tracking using the following steps:
Decide what expenses you want to track
Choose an app or software
Set up your account
Start tracking expenses
There are some more detailed instructions on each of these steps below.
1. Decide what expenses you want to track
If you're wondering how to get started with expense tracking, the first step is deciding what expenses you want to track and why. If you don't know exactly what you want to track, then it's best to start small. For example, you may only want to track mileage or reimbursements for employees who travel often.
2. Choose an app or software
Next, choose an app or software that will allow you to easily upload receipts and input expenses so they can be automatically approved, tracked, and reimbursed.
3. Set up your account
Once you've chosen your app or software, set up an account and make sure that your employees have access as well.
(We have a handy guide that explains how a successful implementation process should look like.)
4. Start tracking expenses
The last step is to start tracking expenses. You may want to set up a system that requires employees to submit their receipts and expense reports on a weekly basis. You can also set up an approval process where you review each receipt and approve or deny it before moving forward with reimbursement. It can also be extremely helpful to train your employees how to use the expense tracking software to ensure this process rolls out smoothly.
