Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

Successful business leaders have all the information they need to make good decisions…Do You?

Friday, May 06, 2016

How to Control Staff Expenses


According to one recent survey, expense fraud is costing British businesses £100 million a year.

Now, far be it from me to accuse anyone of fraud. But the fact is that it’s easy to lose control of staff expenses even if there is nothing illegal going on.

One business owner I worked with recently was shocked to discover that staff expenses had doubled over 24 months.

The CEO, who was very trusting – some might say naïve – did not oversee expenses, and it wasn’t until a new office manager queried why staff expenses were so high that the scale of the problem truly hit home.

It turned out that key members of staff had access to a company credit card. Since there were no written guidelines about what they could claim, they took a broad view, for example charging for a weekly meal for staff. As nothing they claimed was ever challenged, they never thought twice, until their expenses ballooned out of control.

It’s human nature; if we’re given access to a company credit card, we’re likely to be much less careful than if we have to spend our own money.

So how can you keep a firm lid on staff expenses?

The key is to lay down firm ground rules about what staff are allowed to claim, in writing. Most are honest and will stay within the guidelines they are given.

Where possible, avoid giving staff access to a company credit card. It is much harder to reject expenses once they’ve already been charged to the card!

A much better approach is to make staff pay expenses from their own pocket and claim back with an expenses request. Not only are people naturally more careful when the money initially comes out of their own account, it will also be easier for you to refuse payments that seem excessive or unwarranted.

Whether staff are charging expenses to a company card or claiming back later, review their expense claims very frequently – at least once a month. It is difficult to dispute a claim for lunch two months after the fact, when no one can remember the exact circumstances.

Regular reviews of staff expenses will make your team much more conscious of what they’re charging to the company. It will also make it easier for you to see if you’re spending more than you have to.

Challenging individual members of staff about their expenses can feel awkward, there’s no doubt about it. Even so, it’s very important. This is one area which is ripe for abuse and overspending, and getting a grip on staff expenses can be extremely important in managing your overall cashflow.

If this is an area where you need help then get in touch.
 
Garry Mumford is author of the free guide, The 5-Step Process To Get Your Customers to Pay on Time, Every Time. He is founder and Director of Insight Associates, which since 1992 has been providing owner managed businesses with the financial insight essential for development and growth.
 
 
 

No comments:

Post a Comment

Let us know what you think!

Insight Associates, Insight House, Riverside Business Park, Stoney Common Road, Stansted Mountfitchet, Essex, CM24 8PL, UK
Tel: +44 (0)1279 647447 Fax: +44 (0)1279 814512
Insight Associates is a trading name of Financial Catalysts Limited. Registered in England and Wales Number: 5670047. Registered Office as above. Disclaimer | Cookies