We understand that whilst most companies would like to adopt best practice procedures it can be hard to a) know what best practice is and b) know how to replicate it or implement it.
So here’s a guide that might help.
This guide provides eight tips that could help make submitting, approving and paying expenses more efficient, more appropriate, and less frustrating. It also includes eight resources that you may find interesting.
Tip 1.
Having a fair, clear, and unambiguous policy is the start of any best practice expense process. Moreover, companies have an obligation to create a policy to validate internally, and to the Canada Revenue Agency (CRA) should they enquire, that the expenses being reimbursed are genuine, and that they’re not reimbursing individuals for inappropriate or personal expenses.
All too often, an expense policy 1 is an afterthought that may not be properly aligned with the business. It does the job, but it may not be clear, fair or appropriate. Ideally, employees should not have to read a 30-page document before they book a hotel or flight. The key is to review and update you r policy regularly – and then distribute it internally and explain it clearly. This is crucial because as research by Concur discovered, and a recent Amadeus poll confirmed 2 , approximately half of employees say they don’t even understand their policy!
Tip 2.
When it comes to expenses, simple and straightforward is the key to ensure employees are more likely to comply. If your systems are bogged down with layers of administrative complexity such as triplicate forms and pre-approval, it will have a demoralizing effect on employees and tie up precious man-hours.
Worst of all, having too much complexity doesn’t mean you won’t avoid serious mistakes – in fact it makes serious mistakes more likely. By making the process too complicated, companies also run the risk that people may exaggerate their expenses to compensate for the pain of claiming them in the first place.
1 Download a free expenses policy template: https://www.concur.com/en-ca/expense-policy-template
2 Only 51% say they understand their company’s travel policy fully, 47% say the travel department neither helps nor hinders the business, 15% say it is a hindrance: http://www.tnooz.com/2013/01/28/news/amadeus-finds-disgruntledbusiness-travellers-in-state-of-the-nation-study/
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A process that is both robust and quick helps ensure that expenses are signed off properly by the right level of management and that regulatory compliance is being adhered to.
Here’s one way to keep it simple… It’s not best practice to ask your employees to calculate sales taxes for you. They don’t understand the complexity, and frankly they don’t care. They just want their money back. Rather, use a system that calculates the GST/PST/HST for you based on the expense type and province or territory. Or send your receipts to specialist companies to reclaim the taxes on your behalf.
Tip 3.
When it comes to the details needed for an expense report, the secret lies in balance.
Don’t ask for War and Peace. But, having said that, don’t simply accept the price and date for each expense item either. Companies don’t ask for receipts because they don’t trust their employees, but because the finance team knows that the CRA requires receipts as proof of expenses.
Capturing relevant expense information will help to ensure there are no delays in administration and reimbursement, and help avoid potential problems with compliance later on. Having the right amount of information also means that you will reach the minimum requirement for the CRA.
Remember that different expenses can require different information for tax purposes. For client entertainment claims, for example, the CRA recommends you maintain records of the names and business addresses of the customers, together with the relevant places, dates, times and amount spent, supported by receipts. You will also need to demonstrate that the amount was incurred for the purpose of earning revenue.
It is also important to capture business mileage data, because mileage is an expense type that is easy for employees to get wrong and it is also easy for the CRA to check on.
Tip 4.
Best practice means having a clear, published timeframe for submitting expenses. It is important to do the right thing by your employees and pay them as quickly as you can, in line with your established payment timetable. However, it works both ways – it is also important to ensure that employees are submitting their expenses within a prearranged time frame.
When employees delay claiming their expenses for months not only does it hurt their wallets, it also can cause cash-flow challenges for the business, along with the associated accounting nightmares.
Tip 5.
While we advocate swift approval of expenses, it is also crucial that managers have the courage to push back on non-compliant or inappropriate expense claims. Best practice means making approvers accountable for the application and enforcement of your policy, but, as we said earlier, approximately half of employees say they don’t understand their policy
– and this goes for managers too. By engaging with the management team and explaining the rationale behind the policy, it is possible to get their buy-in. Not only does this drive compliance, it can also promote behavioural change which leads to long-term cultural shift and ongoing savings and policy compliance improvement in the long run.
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Tip 6.
In these days of mobile and global staff workforces, trying to catch up with someone to sign off your expenses is getting harder and harder. If employees have to wait and constantly chase their management for approval it can lead to delays and frustration.
Allow managers to check and approve expense reports while out of the office. It helps if you can use a tool like Concur hat allows approvers to say ‘yes, this is okay to pay’ while they’re out and about; so they can approve reports anytime, anywhere. The beauty of having access on a mobile device is that it is faster to submit and approve expenses on the go.
Tip 7.
How good is your end-to-end expense management process? When was the last time you conducted an audit? Some see expense auditing as an unwelcome intrusion. On the contrary, in fact, regular auditing can actually make your expense processes work better. Auditing can help iron out the glitches in your operational procedures and help to maintain a fair system.
Good auditing actually makes for good practice – and a best practice process should include receipt validation and auditing.
Are you checki ng that your employees are claiming what they say they are and that the receipts match and are valid? For example, are they submitting credit card slips or receipts, or both? Are they claiming for the same expense twice? Although expense fraud is not common, it’s not unheard of. In 2012, 17.2% of fraud cases in Canada involved expense reimbursements 3 .
In our experience, we’ve seen everything from brown paper bags being used as evidence for buying juice for a sick colleague, to a photograph of a gas pump being used to justify a mileage claim. These are not valid receipts.
It is a good idea to have guidelines within your process that include random audits. You might also choose to audit items that are particularly tax sensitive or items over a certain value.
While it’s not always possible to check everything, it is possible to outsource this process.
Tip 8.
Have you ever waited for someone to pay the money they owe you? It’s not fun. Once employees have gone through the process, complied with policy, filled out the right expense forms and attached receipts, it’s only fair to pay them on time. You don’t want a situation where employees think twice about a business trip that will grow the company and drive revenue because they are worried about when they will be reimbursed.
It is important to reimburse employees’ expenses in line with the established payment schedule. Ideally, payments should go straight into the employee’s bank account, or directly to settle their corporate card bill, on a timely and reliable basis. If people are paid when they expect it, they can budget appropriately. Prompt payment can also improve morale and productivity.
3 http://www.acfe.com/uploadedFiles/ACFE_Website/Content/rttn/2012-report-to-nations.pdf
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1. Expenses policy template
2. Expenses trends infographic
3. Concur T&E Spend Report
4. Concur Solution Spotlight on Expense Fraud
5. Aberdeen Group: Expense Management for a New Decade report
6. 5 Reasons Why a Spreadsheet is a Horrible Way to Manage Expense Reporting
7. Concur Expense overview video (2:45 min)
8. Concur’s Mobile App overview video (1:27 min)
The adoption and consistent application of a best practice expense process is proven to save time and money while improving your employees’ experience. Moreover, having a best practice solution that is available online and via mobile devices leverages the investment that companies have already made in existing technology. Lastly, a best practice expense process provides access to data for analysis and review that can help improve policy and highlight opportunities for further cost savings.
In conclusion, using a best practice process enables the effective handling of expenditure in a way that is consistent with your policy, your company’s needs and your employees’ needs.
Concur is a leading provider of integrated travel and expense management solutions. Our adaptable web-based and mobile solutions help companies and their employees control costs and save time. Our systems adapt to individual employee preferences and scale to meet the needs of companies from small to large.
Call us on 1 800 401 8412 or visit us at www.concur.ca
©2013 Concur, all rights reserved. Concur is a registered trademark of Concur Technologies. All other company and product names are the property of their respective manufacturers.
Specifications and other details listed are accurate as of printing, but may change without notice. WP BEST PRACTICES EXPENSES CA 2013/05 www.concur.ca
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