What is expense management

What is Expense Management?
SalesBabu
CRM For Enterprise Business
& Startups
M: +91 9611 171 345 Email: sales@salesbabu.com

What is Expense
Management?
What is Expense Management?
Expense management (EM) refers to the policies set up
by an organization to process, pay, and audit expenses
initiated by an employee. These expenses include, but
are not limited to, the amount incurred for entertainment
and travel. Expense management includes the
procedures and guidelines that govern such spending,
also the services and technologies applied to process and
analyze the data associated with it.
Expense management systems can also be used for sole
traders to manage and monitor their business
expenditures. Expense management has two primary
elements: how a business pays for their items and how
they track that expenses.

Expense Management – Is it difficult?
Managing your employees’ daily spending has always been a bit challenging task. Whether it’s office
supplies, travel expenses, or any other staff member’s expenditure, these all are never an easy job.
Managing expenditures can be a tough job, especially if you’re processing expenses from various
employees. You will quickly find yourself becoming confused with the number of receipts, without a proper
system in place. It can be challenging to establish an audit trail if spendings aren’t processed promptly.
Also, finding the time to process expenses as they come through can be equally difficult when you are
running a small business.
Delay in the processing and payment of personal spendings could result in issues in both your business
and personal cash flow. Delaying in paying employee expenses, then you may also face problems with
reduced morale.
Unfortunately, when you use a manual system delay can be common. To work smartly and hasslefree –
it’s worth looking at expense management tools like those available in SalesBabu Business Solutions. Our
Online Expense Management Software will allow you to enter and track your expenses from a centralized
location.

Employee Expense Management Policy
The most efficient way to manage employee spending through your business is to set up a company
expenses policy. A company’s expenses policy should describe what you will and for what you won’t pay
for.
You should ensure that your expenses policy is crystal clear and concise; easy for everyone to
understand. In case, if expenses policy is not clear whether or not spending is permitted, employees can
be permitted to try to apply for it. This extra work creates a lot of paperwork, so taking the time to clarify
and pare down your policy, in the beginning, will save admin’s time in the long run.
Once you’ve reviewed and created a final copy of your policy, make it easily available and visible to your
employees. This will help save on invalid expense applications, which will minimize your admin work and
free up more of your important time.
As the ultimate owner of the business and of the expenses policy, it’s your duty to ensure it remains up-to-
date and evolves in line with your business. You may find the policy needs updating as the number of
employees keeps growing or the company expands to incorporate new and different types of expenses.

What to have in an Expense Management Policy in your Business
Your expense management policy should clearly define what is and isn’t classified as a work-related
expenses.
There are mainly two types of employee expenses: ones that are paid directly by the company on behalf of
an employee, and ones that the employees pay and then claim back in the form of reimbursement.
Most of the expenses are related to business travel, so make sure your policy includes trains, taxis, fuel (if
employees are using their own car) etc. If your employee’s travel is international, add sections covering
legal document expenses like Visas and any vaccinations or medical expenses needed. You may also
include an allowance for business materials or meals purchased during the trip.
It is always recommended to include an expense limit so that you can effectively budget. You may, for
example, agree to reimburse a meal up to £14 – with the employee covering the rest of the cost
themselves.

For further reference, you may also define a list of non-reimbursable expenses and include them like:
■ Expenses incurred by non-employees who join your employees on a business trip
■ Any unapproved upgrades, such as hotel suites or first-class travel
■ Any personal purchases made during the trip, such as clothes or for entertainment
■ Fines incurred while on the trip (like speeding tickets)
■ Personal trips
You may also want to add disclaimers so that you aren’t liable to replace lost personal property like luggage.
Your company’s expense policy doesn’t necessarily have to be comprehensive, as it will evolve to suit your
business and employees. Employees of your organization should be encouraged to clarify whether their
expenses are permitted.
It’s always advisable to create a business culture where, if employees are unsure of whether an expense will
be reimbursed, they can check with you in advance. This will help them prevent problems such as you having
to pay out for unnecessary expenses, or employees becoming resentful when they have to pay for what they
thought was a business expense.

Expense Management Process
The Expense Management process includes the below tasks:
Entering Expense Reports
For work-related expenses request like business tour expenses, relocation expenses, or tuition expenses,
employees must enter and submit expense reports. Each and every expense report have a header and
detail records. The header record shall contain employee’s address book number, expense report type,
and other general information. And the detail records will have information about each of the expenses
incurred. Pre-submission of the expense reports, employees can review that report totals and verify the
amounts spent. Employees can also print reports for their records.
Expense Reports Approval
Most of the companies need expense reports to be approved by managers or supervisors reimbursing the
expense to the employees. Managers can either approve or disapprove of the employees’ reports. If an
expense report is approved by a manager, the system changes the expense report status to indicate that
it is ready for an auditor to review, if required, or ready for reimbursement. If the manager disapproves of
any expense report, the system notifies the particular employee and the employee must revise and
resubmit the report for the approval process.

Expense Reports Audit
Once the expense reports are submitted and, if needed, approved by the authorized person, they might need
to be reviewed by an auditor. It is the auditor’s responsibility for verifying and approving receipts received,
and for approving reports that contain policy exceptions or reports submitted by employees who are
monitored. The expense workflow framework uses the policy audit limits and rules to determine which
expense reports must be reviewed by an auditor. It depends upon the Auditors, whether he approve or
disapprove of the reports. If an expense report is accepted by the auditor, the system changes the status of
the expense report to indicate that it is ready for reimbursement. And in case, if the expense report is rejected
by the auditor, the system notifies the employee and the employee must modify and resubmit the report.
Reimbursing employee expenses
Once the expense report status reaches the reimbursement process stage, it is then available for
reimbursement processing. You can initiate reimbursement and generate the appropriate accounts payable or
time card records. The system will then generate records based on the reimbursement method that you
specified in the employee group profile or the employee profile. After processing the expense report, the
system automatically notifies the employee.

Conclusion
Are you ready to simplify your receipt and expense management process? Organizations of all shapes
and sizes rely on our online Expense Management System to save time.
Manage your organization’s entire expenses by using our automated online expense management
system. The best way to manage employee expenses in your business by setting up company’s
expenses policy. This policy will develop a framework, what you will and for what you won’t pay for.

Many Businesses trust
Salesbabu, including

What is expense management

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Ähnlich wie What is expense management

Ähnlich wie What is expense management (20)

Mehr von SalesBabuCRM

Mehr von SalesBabuCRM (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

What is expense management