Build Expense Controls into Your Expense Management Procedures

Businesses of all sizes face the risk of expenses going over budget, resulting in lost revenue and profits. In order to ensure that your business does not fall victim to this common accounting pitfall, you should have built in expense controls in your expense report process from the beginning rather than adding them as an afterthought once problems have arisen. This article will discuss what expense controls are, why they are essential to protecting your business from loss, and how you can implement them into your company’s procedures.

What Are Expense Controls?

Simply put, expense controls are measures businesses take to track and manage employee spending. By setting limits in your expense policy on how much employees can spend and requiring receipts or approvals for all purchases, companies can avoid overspending and safeguard against fraud. 

It is vital to implement a well-thought-out system that will work in your specific business environment. For example, some business owners allow unlimited expenses if the cost does not exceed $100 and employees can provide the proper documentation. Others use a per diem limit of $200-$300 per day plus reimbursement for certain travel expenses like meals. Some companies may be comfortable with allowing higher limits but require multiple levels of approval before an expenditure is made. In contrast, others may insist on complete transparency in their organization and will only allow approved expenses within set parameters at predetermined thresholds. 

The key thing is to ensure that you have an effective expense control system in place before you start incurring any costs, as opposed to trying to develop one once the problem has already occurred.

What Do They Protect Against?

While no company wants to spend more money than needed, many businesses spend more on expense reimbursements than necessary. Expense controls help you track where your money is going and ensure that your spending is in line with your budget. Without expense controls, it’s easy to lose track of expenses and spend more than you can afford.

Having controls built into your expense management procedures doesn’t just help businesses stay within budget. It also helps protect them against mileage reimbursement fraud. According to the Association of Certified Fraud Examiners (ACFE), expense reimbursement fraud accounted for almost 15% of all work-related fraud schemes and lasted for around two years on average before being detected. With the proper controls in place, you can better monitor expenses for abnormalities to identify loss earlier.

Types of Expense Controls

When it comes to spending your budget wisely, managing your expense process is vital. Whether this means implementing a new tracking system for expenses or just trying methods that have worked for other companies in the past, an expense control system can help you maximize budgets with mind-blowing efficiency. There are various types of expense controls that you can choose to adapt to your expense management procedures.

#1: Segregate Accounting Duties

A good system of checks and balances is as essential in a business as in the government. With expense management, this means having people handling the various duties that come with approving expenses, like reconciliation, approval, and repayment. 

If you can’t completely separate the responsibilities within your accounting department, make sure you rotate who performs them regularly. By doing so, no one will be able to carry out fraudulent transactions or make mistakes for too long before it is caught.

#2: Standardize and Digitizing Accounting Documents

When you standardize your accounting documents, like purchase orders, invoices, expense forms, and receipts, you’re not just making it easier to do your job. You’re also making it easier for auditors to do theirs. 

With digital business documents, you’ll be able to quickly scan through the documents and compare them with past ones allowing you or an auditor to find any issues promptly and efficiently. It is also easier to spot fraudulent activity as well with standardized documents—allowing you to see patterns of behavior easily.

#3: Reconcile Accounts Regularly

One of the most effective internal control procedures is regular reconciliations. These can help you confirm that all account balances in your company’s accounting system match the balances in independent accounts. 

During the reconciliation process, all routine banking activities should be carefully reviewed, such as cash deposits, cleared checks, and wired funds. Any differences during reconciliations will highlight errors and fraud. 

#4: Automate Expense Tracking

In years prior, tracking and managing employee expenses was a never-ending task that could be very labor intensive. Now, with new technology, there are countless examples of expense software that help businesses monitor their budgets. Electronic approval systems that allow employees to track mileage, upload receipts, or quickly review policies have helped many companies cut unnecessary costs.

These are just a few of the many options you have for controlling expenses and choosing which one will depend on your organization’s needs.

How Do I Implement Expense Controls?

Implementing expense controls is a matter of understanding what needs to be controlled and then taking steps to ensure that those controls are in place. The first step is to create a budget for your business expenses. This will help you understand where your money is going and identify areas where you may need to cut back and where controls are required.

Once you’ve identified where controls are needed, you will need to build your expense controls into each step of your reimbursement process so that all expenses are handled uniformly. After you’ve developed the controls and decided to incorporate them into the procedure, the next and arguably most important step is to make sure that your employees are aware of it and get the necessary buy-in from stakeholders, ensuring everyone is on board.

Let Company Mileage Help Control Your Expenses

Getting your company’s expenses under control can feel like an impossible task, but there’s no reason to go it alone. With CompanyMileage and its suite of travel and expense management software, SureMileage, SureMobile, and SureExpense, you can automate many aspects of your company’s processes. This includes mileage tracking, and expense report submission, allowing you to quickly and efficiently implement expense controls into your procedures. 

With point-to-point calculations, our mileage reimbursement platform streamlines your mileage expense management while helping ensure you’re not reimbursing disallowed mileage. CompanyMileage also provides you with the ability to flag behaviors in the system, giving you the power to correct mistakes quickly. Additionally, through integration with your accounting and payroll software, CompanyMileage makes sure employees are paid the right amount at the right time. 

To learn more about how SureMileage, SureExpense, and our SureMobile can help you control your expenses, request a demo with CompanyMileage today.