No Image Available

Ten steps to better expenses management


In most companies, processing travel and entertainment expense claims uses either paper-based forms or Excel spreadsheets. As a result, control of spending across the organisation suffers and data needs to be re-keyed for entry to the general ledger, payroll and tax systems.

According to American Express, travel and entertainment is the second largest item of controllable company expenditure after salaries for most companies. Signifo claims that automating the expense claim process can reduce processing cost by as much as 50%. This introductory guide explains how. Implementing the following 10 measures, it says, will do more than just reduce processing costs. The measures help increase control over out-of-policy spending and can so reduce total travel and entertainment spending.

1. Automate the process and capture data once, at source
A Web-based expense claim application can reduce the processing cost of submitting, approving and processing expense claims by by capturing data at source. This reduces approval time and allows the accounts department to export consolidated data to the payroll system and company accounts for VAT reclaim purposes, client bill-backs, P11D and other purposes.

2. Choose an automated system that is user-friendly, allows a rapid implementation and does not require training
While the cost savings from implementing an automated expense claim system are considerable, your return on investment will be significantly higher if you can avoid a costly implementation.

3. Ensure that claims are independently authorised within the firm
In particular, look at who approves the claims of senior managers. The approval structure not only affects financial control within the organisation but can also be an issue for tax authorities with regard to relief from reporting expenses payments and benefits-in-kind.

4. Write or update your existing policy and query all claims that fall outside policy
A policy should be agreed and then clearly communicated to employees. An automated policy allows for more transparency than a paper or Excel-based system and hence encourages self-policing by claimants. Needless to say, an automated system allows claims that fall outside the company policy to be queried as a matter of course.

5. Consider reviewing less than 100% of expense claims and/or expense receipts
Many organisations review 100% of expense claims and/or receipts. Frequently, the cost of 100% review exceeds the savings that result and will serve to slow the repayment of expense claims. Instead, consider reviewing only a percentage of claims, including the largest expense claims or expense items that are prone to errors.

6. Centralise checking of expense policy compliance and receipts in the accounts department
There are two major disadvantages in allowing line managers to check receipts and conformity with company expense policy. First, as this is work that will be repeated in the accounts department, an approving manager’s time is better focused on higher value tasks. Second, it creates an issue of split accountability; suspect claims will often be approved because the line manager gives a claim only a cursory glance, while an accounts person accepts the claim on the basis that “it’s already been approved by the boss”.

7. Consider reducing the use of cash advances and/or corporate credit cards
One advantage of an automated expense claim system is that it can reduce the processing and payment cycle to as little as two days. A rapid processing and payment cycle makes it more acceptable to ask employees to “fund the company” by paying travel and entertainment expenses themselves, without using cash advances or corporate credit cards. Not only does this encourage employees to submit claims in a timely fashion, but it also encourages employees to ensure their spending falls within the company expense policy guidelines. In many cases both processing costs and total T&E spend fall after the implementation of such a policy.

8. Identify claims in the pipeline
An automated system allows you to look at not only those expense items that have been paid but also claims at other stages of processing. Not only does this allow for accruals but it also identifies employees that are failing to submit or approve claims in a timely fashion.

9. Seek to recharge expenses to customers
In a professional services environment, it is common practice to recharge expense items to the relevant client. In other environments, there may also be instances in which it is appropriate to recharge expenses. An automated system, in which expense data is captured on a database, allows accurate recharge statements to be compiled quickly and efficiently.

10. Claim VAT from across the European Community
If you are registered for VAT in any of the member states of the European Community, you are entitled to reclaim VAT paid in any other member state. If you are not currently reclaiming VAT on your non-domestic travel and entertainment spending, you should be doing so. An automated expense claim process will classify expense items by country and will identify VAT refunds due.

Managers from Signifo will discuss these 10 steps to best practice expenses management in an online workshop at 1pm on Wednesday 26 September. A more detailed version of this checklist, specifically related to the functions of the Signifo Expenses system, can be ordered online. The company also offers a 30-day free trial of this service.

We are grateful to sister-site AccountingWEB for this article.

One Response

  1. If you’re not using an automated system, make sure you’re using

    I agree that a web-based system is best for this. However some businesses can’t afford/justify the cost of this, and will continue to use Microsoft Excel. If that’s the case it’s important that the data is managed well by all that touch it, and that repetitive data entry is avoided through automation. Also, from my experience even those businesses that do have web-based systems often don’t get everything they need from that system and end up exporting to Excel, usually for reporting purposes.

    Having worked in HR for some time and seeing lots of data errors and slow processes that distract from real HR work, as I hobby I set up . Its a free site about Excel for HR, Reward and Payroll professionals.

No Image Available

Get the latest from HRZone

Subscribe to expert insights on how to create a better workplace for both your business and its people.


Thank you.