Expense management can involve lots of time-consuming admin, especially if you get a backlog of claims at the end of the month. If your workforce is mainly remote, keeping track of employee spending is even more challenging, which increases the risk of delayed reimbursements and non-compliant claims.
That's why it's essential to streamline your expense management process from submission to approval. In this post, we'll look at what's involved in managing expenses, how remote work has changed the landscape, and the best ways to streamline.
What Is Expense Management?
Expense management is the system used by an organization's finance and HR teams to track and process employee expense claims. Its primary purposes are to monitor and control staff spending, to ensure that only authorized purchases are reimbursed, and to keep a record of all transactions.
Authorized expenses may cover anything an employee requires to carry out their job. This might extend to travel, accommodation, food while on company business, office equipment and supplies, and job-related education such as a data engineering online course.
Expense management includes processes such as:
Establishing company policies
Setting expenditure limits
Collecting and filing receipts from employees
Approving expense claims
Making reimbursements for authorized expenses
Issuing and monitoring corporate credit cards
Submitting monthly or quarterly reports.
Many companies still use paper forms and spreadsheets for management, but it's more efficient to lean on software solutions, especially when processing expenses for remote workers and distributed teams. The most advanced options can sync with other business software, such as your human resource management system.
How Is Expense Management Different for Remote Workers?
As with many aspects of the workplace, the shift to remote work has changed the landscape for employee expenses.
Expense Types Have Changed
Instead of traditional expenses, like air tickets, hotel accommodation, and restaurant meals, remote workers now claim for things like internet services, computers and mobile devices, and online conferencing software.
Employees who work from home use their own electricity, internet, telephone, and office supplies. It's reasonable to expect the company to pay for the percentage used during working hours. Plus, remote and distributed teams may still hold in-person meetings, requiring reimbursement for fuel costs.
Traditional Processes Won't Cut It
In most companies, existing expense management processes are based on the assumption that employees work in the office. Hence, a remote or hybrid model requires some adaptations to accommodate distributed teams, minimize errors, and guard against fraud.
For example, it's not viable for remote workers to physically submit paper receipts or expense forms. Mailing or faxing them could lead to delays and mix-ups, while remote employees might accidentally (or otherwise) confuse personal and business expenses.
It's Harder to Keep Track
With distributed teams based in various locations, keeping track of expense claims and approvals is also more challenging. You'll have to coordinate virtually with employees, potentially across time zones—you can't just pop into their cubicle to check details like you would in a traditional office.
Hybrid employees might work from different locations on any given day, so managers must know which expenses (such as commuting or parking) are valid for each situation. For remote workers around the globe, you may have to handle expense claims in different currencies.
Benefits of Streamlined Expense Management
With remote work adding another layer of complexity to expense management, it's more important than ever to have a simplified, streamlined process. Here's why.
With digital expense management solutions, you can view all your expense data in a single place and see an overall picture of employee spending. You can make accurate predictions for future expenditures and set budgets by running analytics on this. All the information you need will also be ready for performing audit checks.
As well as visibility into your company's cash flow, you can spot problems quickly and look out for fraud. Smart systems will tell you if a receipt has been modified or submitted more than once, enabling you to investigate the employee responsible.
Expense claims can be time-consuming for the employees submitting them and the finance team handling them. Streamlining these processes minimizes the time spent on admin, with automated systems eliminating manual data entry and reducing costly errors. For example, payroll processing software can add approved reimbursements directly to paychecks.
As well as improving compliance, streamlining makes creating and enforcing multiple expense policies for different departments or projects easier. All these time-savings lead to enhanced productivity and lower operational costs.
In a 2022 survey, 86% of business travelers reported that they'd experienced a delay in receiving reimbursement at least once in the past year. 89% said a delay had impacted their finances. It's not acceptable for workers to be out of pocket for weeks at a time, especially in an uncertain economic climate.
Streamlined processes, such as the ability to scan receipts to a mobile app and automate approvals, enable much faster reimbursements. Employees no longer have to wait until the end of a payment period to submit a claim nor for the expense run to be processed by the finance team.
How to Streamline Remote Worker Expense Management
So, we've seen the importance of streamlined remote worker expense management. Now, we'll show you some tips on how to achieve it.
Create a Remote-Specific Policy
Since a remote working model necessitates adapted expense management, it makes sense to draw up a policy that addresses this specifically. It should identify allowable expenses for remote staff, make it clear which expenses are not allowed, and outline the difference between expenses and stipends.
The policy should also cover the company's position in permanent and temporary workplaces. For instance, if an employee is officially based at home but is sometimes required to visit the office, you might pay their travel costs. But those who are office-based and occasionally choose to work from home as a perk wouldn't be able to claim work-from-home expenses.
Another factor to consider when creating a remote-specific expense policy is how to handle sales compensation for remote sales representatives. Since they are not working in a traditional office environment, you may need to adjust your compensation policies to ensure they are fairly compensated for their sales activities but not exceeding their own means.
Clear Guidelines and Communication
It’s also important to include general guidelines around reimbursement to avoid confusion and dispute. You might set daily, monthly, or yearly spending limits for each category of expenses, state when and how employees can expect to receive payment, and outline rules such as booking transport in advance or using preferred vendors for office supplies.
Whatever your policies, you must communicate them effectively. Transparent communication with your workforce keeps everyone on the same page about expense management—whatever their location. Make sure your company expense policies are easily accessible to all workers.
Tap into Technology
To streamline remote worker expense management, take advantage of smart technology. It’s important to give everyone the right tools so finance teams can minimize admin and remote employees can be made accountable for their spending.
One example would be a mobile app that lets workers scan receipts instantly, so there’s no risk of losing them or forgetting to take a photo later. Managers would be immediately notified and asked to approve the payment. The finance team would then receive details of these expenses and a record of the approval, so they could quickly process the reimbursement.
Other solutions include expense report software (which can automate the entire expense-reporting process from submission to approval), GPS tracking to verify claims for travel costs, and software that detects non-compliant claims and gives employees a chance to amend them before submission.
Expense management for remote workers has become more complex, requiring new processes and tools to manage spending and ensure compliance. One useful tool for remote worker expense management is customer service chatbots, which can assist with queries about expenses and provide real-time support to employees. By implementing chatbots, remote workers can have access to quick and efficient support, leading to faster resolution of issues and improved compliance with company policies.
Consider Corporate Credit Cards
One way to eliminate delays in reimbursing employee expenses is to use corporate credit cards. Instead of using their money to pay for internet services, computing equipment, or occasional travel costs, workers can use an expense card with a pre-set spending limit.
These corporate cards can be connected to your office systems, helping managers keep an eye on spending patterns. This method is especially helpful for low-earning remote workers who can’t afford to be out of pocket.