Managing Expenses: How Expensive is Your Expense System?
Every business, be it a huge multinational or a small family-run tearoom, has expenses. From IT software to tea bags, any additional costs incurred by an employee have to be reimbursed.
Are you managing them in the most effective way? Do you risk giving out credit cards or are you still expecting employees to find crumpled receipts at the bottom of handbags or jacket pockets every month?
Simple petty cash systems are the most common method of paying for expenses, but having to dish out cash and then waiting for a receipt is a hassle; so companies usually move to a system of submitting monthly expenses which is also time-consuming and liable to mistakes. This system means that employees are using their own funds and have to wait until the end of the month to submit expenses, and then even longer for the money to be refunded, so it’s not popular. Some companies give trusted employees credit cards, however the risk of fraud is potentially high and they can easily be abused so it isn’t something that many are prepared to risk.
A report on Occupational Fraud and Abuse (PDF) by the Association of Certified Fraud Examiners, found that 14.5% of schemes being investigated involved expense reimbursement fraud. The Royal Academy of Music, for example, was defrauded out of £200,000, over a four year period, by a former Director so in any system you adopt the prevention of fraud should be a key consideration.
There are now alternatives to the above systems that I think all businesses should be using. Business prepaid cards are proving extremely popular with savvy employers. Employees are issued with a personalised company card which has been topped-up with money by the employer. There’s no need for the card to be attached to your other banking, or that of your employee. There are a number of prepaid cards available and the advantages will depend on the supplier. However, the key advantages you should look for and expect are:
Total centralised control: You should be able to manage all your business’s cards and reconcile expenses for all employees via an online centralised card management system
Decreased administration time and employee fraud: There should be no need to sift through employee receipts as employers are provided with full oversight of all spend. You should also be able to track employee expenses and block cards online
Improved audit trail and expenses reconciliation: You should be able to download statements for each card online 24/7
Significantly reduced costs: If you choose the right card you should save hundreds of pounds over equivalent corporate credit cards as you pay one low annual fee to open an account
So check out our website, www.mycashplus.co.uk/business and see how business prepaid cards can help you manage your expenses.