How can procurement add more value to your organization? First, you will need more visibility and efficiency into your process.
The key to simplifying your expense reimbursement process
At some point, every company needs to determine how it’s going to handle expense reimbursements. The last thing you want to do is create a cumbersome expense reimbursement process that moves slowly and leaves your employees guessing what’s covered and what’s not covered. Your employees won’t be too thrilled if they’re expected to cover business-related expenses out of their own pockets and wait a long time to be reimbursed.
This all starts with creating a crystal-clear expense reimbursement policy. That way, employees and managers both know exactly which kind of expenditures can be reimbursed—and which cannot. With a clear policy in place, your company won’t have to worry about getting into arguments over whether or not a certain expense is eligible to be covered.
In addition to implementing a clear reimbursement policy and making sure that your employees are aware it exists, you can also simplify the process by:
Using technology that enables you to gain full visibility into your spend
If you’re still managing reimbursements manually, it’s time to modernize your approach by investing in a platform designed to make managing your finances a lot easier.
For example, Fraxion's Expense Management module provides organizations with precise insight into discretionary spending. Not only does it automatically log mileage under your company’s specific reimbursement rules, but it also enables employees to capture receipts with their mobile devices and send them to the approving manager. The end result: Workers are reimbursed faster.
The platform also automatically converts currencies. So in the event your employees are traveling internationally, you won’t have to do any complex conversions by hand to figure out how much each person is owed. This eliminates human error, thereby ensuring employees are compensated fairly—not more and not less.
Modernizing your expense reimbursement process
Employees can’t afford to wait around forever to receive the money they’re owed. Build in as much automation into your expense reimbursement process as you possibly can. Simplify it.
Do you really need three managers to sign off on every expense that materializes—particularly when a lot of those expenses are Starbucks tabs? It’s doubtful.
Better yet, set up a system to get pre-approval of employee expenses before they even happen. Are you sending your team to a sales conference? Chances are you know most of the expenses they’ll incur on the trip (e.g., transportation, hotels, per-diem food expenses, conference tickets, etc.).
By setting up simple rules for pre-approvals of expenses, you’ll not only save time when it comes to reimbursements, you’ll also have a better idea of how to budget for them in the first place.
Issuing company credit cards
While it won’t make sense for every company to give their employees corporate credit cards, it’s safe to say a number of companies would benefit from giving at least some of their workers their own cards.
If employees aren’t putting up their own money in the first place, you won’t have to worry about reimbursing them.
Worried that some employees might abuse the privilege? Don’t be. Put spending limits on each card and let your staff know what the consequences of overspending are.
Using direct deposit to repay employees
Instead of cutting your employees checks to reimburse them—and forcing them to head to their banks to deposit the money they’re owed—consider utilizing direct deposit for expense reimbursement.
That way, money will be sent to employees immediately after expenses are approved. They won’t have to run an errand just to deposit the money they’re owed.
Accelerating reimbursement as much as you can
If you’re not comfortable with the idea of issuing corporate credit cards, that’s totally fine. Just make sure you accelerate expense reimbursement approvals as much as you can.
Don’t just approve expenses once a quarter and make your employees wait to collect the money they’re owed. Try to approve reimbursements as soon as you can after receipts are submitted. That way, employees will be repaid right away. They won’t be distracted wondering where their money is—which means they can direct more of their focus on more pressing matters.
The last thing you want is your employees to worry about being repaid money they’re rightfully owed. If the problem becomes particularly bad, employees may hesitate to cover any expenses out of their own pockets.
By creating a clear expense reimbursement policy, using technology, and implementing mechanisms that ensure your employees will be repaid quickly, you can get more control over your discretionary spending while eliminating an easily preventable problem that causes headaches at many organizations.
That’s the ticket to a happier workforce and a healthier bottom line.