Expense Reporting Tips for Small Businesses

Listen to this article

Informal expenses by employees are often incurred in the bustle of everyday business activity. Overtime, these informal expenses can accumulate, contributing significantly to your business’s outgoing expenses. Tracking these expenses accurately and reimbursing employees quickly can become a messy process, leaving employees anxious and your business with added burden.

This is why a carefully crafted process of expense reporting is crucial to making your business life easier. Here are five key tips to a seamless expense reporting process.

A Well-Defined Expense Reporting Policy

Employees should have a crystal clear idea of what the process entails. If expenses need to be reported within a timeframe, the specific window of time should be clearly defined. For example, the employee is required to record the approximate time of the incurred expense and also the time of reporting.

This benefits of this are twofold: You can guarantee the employee exact timeframe of reimbursement based on their accurate reporting. It would incentivize the employee to pay heed to the details while helping you categorize types of expenses.

Moreover, if employees are required to provide documentation for reimbursement, they should be informed to attach a receipt or provide a valid reason why the receipt is missing.

These policies lay the foundation of a smooth expense reporting process. All disputes and discrepancies can be handled accordingly. However, if the employee is unaware of these particularities, various problems can inevitably arise.

Educate Employees

To minimize the chances of those problems occurring brings us to our second key tip. Before employees hit the ground running, they should be given a live demo of the expense reporting process and also a copy of the reporting policy. Without educating employees, you cannot complain if they fail to follow protocol. And being carefully walked through the protocol, employees can have no reason to slack off.

Educating them can also include reminding them of the need to spend wisely, for every cost directly impacts the business. For example, if cheaper alternatives like public transport are available, they should not use private transport for business needs. This would also discourage them for unnecessary expenses.

Simple Reporting Forms

Reporting expenses is no rocket science. Making complex forms with infinite boxes to check will cause pain and worry to both you and your employees. Make sure the reporting form is minimal with a drop-down choice which shall cover 99.9% of all expenses. Some expenses might require further clarification so make sure to add a field for that.

You need to simplify the process to the last degree possible. Make life easier for your employees and your business.

Record transactions at point of contact

Delay caused in recording transactions would not only delay employee reimbursement but also increase the chances of discrepancies to occur. This means employees should be strictly notified to record transactions immediately. It can tempting to leave mundane tasks like reporting a meal for later. But it is precisely that delay that leads to painful discrepancies like a missing receipt.

You as an employer can use an online calendar like Google Calendar to track expenses as they occur. Online calendars can also sync to your phone enabling you to get notifications before each expense is due.

Automation

No matter how diligently you create forms, lay our clear guidelines, and educate employees, you will find discrepancies in the reporting process. This is part of being human: We are prone to errors. Luckily, being aware of this shortcoming, we have technology to save us. The process of automation has permeated recoding financial data. From invoices to supplier forms, everything has a digital equivalent. 

Yes, you can automate the process of expense reporting too. Software like Xero offer excellent automation services. Several aspects of expense reporting can become extremely easy through automation. The entire process become mobile and faster. Employees can report expenses from anywhere, anytime.

It also forces employees to be report accurately. Through scheduling automatic warnings when unacceptable expenses are entered, and blocking meal expenses that cross limits, employees will be extra careful in reporting expenses.

Plus, you will no longer have to deal with attached or missing receipts; a software will allow employees to scan documentation. The categories of the scanned document will be automatically filtered by the software. The entire process will be streamlined.

Conclusion

The importance of accurate expense reporting can often be overlooked, especially by small businesses. Receipts can fly all over the place, reimbursement can become a burgeoning burden, and employees can forget the desperate need to keep expenses low.

Hence a formal procedure of expense reporting with concise guidelines, forms, and an accounting output is necessary for a streamlined process, ensuring every tiny expense is considered, especially for small businesses.

admin
Author: admin

Leave a Reply

Your email address will not be published. Required fields are marked *