July 23, 2019

Back To Talking About Employee Expenses

By Paul Bieber

Reimbursing employees for expenses incurred in the normal operation of your business is, basically, a time waster for the employee and for your bookkeeping people. But, you must do it, so let’s look at some ways to make it easier.

Issue your employees who regularly incur expenses a company credit card. Place a credit limit on the account for each person. These limits can vary based on each person’s need for expenses. Employees will still submit receipts, on your expense form, within five days after the bill comes into the office. So if your bill from VISA comes on the tenth of the month, then your expense reports are due in by the 15th. This gives your bookkeeper time to check and approve each expense based on the receipts. Using a credit card saves you from cutting individual checks, weekly, to each person. With a credit limit in place you should not have a fear of overusing and the company gets the bonus points or mileage!

Another way to go is to give each employee a cash advance of a fixed amount roughly equal to their expenses. Then each month, upon submission of their expense report, a check is cut on the exact expenses paid. This, though, is still more work than issuing the credit card.

But, still, the question is how do you control expenses? When a person is hired who needs expenses, give a list of allowable expenses and the maximum amount that can be incurred. For instance, breakfast $8, lunch $12 and dinner $20. Hotels are capped at what is a reasonable rate for your area of the country. Better still, make a deal with one of the hotel chains and set up a corporate account that gives a system-wide discount to your traveling folks. These are easy to set-up. Just call one or two of the big chains and they will fall all over themselves to help you.

If a customer is taken for lunch or dinner it is hard to tell them how much they can spend, and in my experience, most people order the most expensive item they can, knowing they are not paying for it. If the client orders a drink at lunch, instruct your employees to order a soft drink and if the client questions this, they should say that since they are driving during the rest of the day, it is against company policy to drink. This is a little bit tougher at a dinner, but you can limit the drinks to one or, at most, two rounds.

No matter how many employees you have, one will always be late getting their expense report in. Simple, don’t reimburse them for the month and they will get the message. Oh if that would only work. But people will complain and tell you they don’t have enough cash to buy gas or travel. You will end up sending a check, but hopefully your point is made.

Restrict air travel to flights that are booked at least two weeks in advance. This saves a big buck on air costs. Use a teleconferencing service to have that face time with a customer, saving time and money.

That’s it for today. We’ll finish up expenses next week.