Managing employee expenses often feels like walking a tightrope. For management and finance teams, unchecked business spending can spiral into a chaotic drain on company resources. From misplaced receipts to manual expense report headaches, inefficiencies abound, leading to delays, errors, and frustrated employees waiting for reimbursements.
Larger organizations aren’t immune, either. Inconsistent expense policies and unclear budgets can lead to overspending, while finance departments struggle to reconcile scattered paper and digital records. It’s a recipe for frustration and financial leakage.
But the good news? Implementing a streamlined process to control employee spending doesn’t have to be complicated. In this blog, we’ll outline five simple yet effective steps to regain control and create a transparent, hassle-free expense management system.
How to Control Employee Expenses
1. Create a Spending Policy
How are employees supposed to spend company money and what is their budget? Things like these shouldn’t be unclear to staff, because who knows what kind of expense claims you’ll get?
Answers should be documented in your expense policy, so employees know exactly what’s expected of them. Clear boundaries will help you keep spending under control and avoid discussions. Not unimportantly, an expense policy will make it easier for your finance department to make expense forecasts.
Here are a few things you should pay attention to:
- A spending policy should be simple, clear, and concise
- It’s a good idea to include examples of preferred spending behavior
- Don’t boss people around: explain the rules in a friendly way
- Write guidelines, don’t make long lists
- Include employees in the process of creating a handbook, because good spending policies should make sense to the entire company, not just management
- Make sure the handbook is communicated to employees and easy to find in case they want to revisit it
- Always update your handbook, because as the world changes, so should your policy
If you need to set up your own policy and you are looking for an expense policy template, then have a look at the blog we wrote about that.
2. Set a Budget For Each Category
Part of getting in control of employee spending is setting budgets for all categories: plane tickets, hotels, restaurants, courses, equipment and supplies, etc. For all expenses, you should define how much each employee is allowed to spend and tell them that they will not be reimbursed when they exceed their budget. There can also be cases in which you want employees to ask for approval before spending. This should also be included in your policy handbook.
Make sure your policy makes sense to everyone, so that it’s easier for them to remember and stick to the rules. This means not making a load of exceptions and being consistent when implementing your policy.
3. Digitize and Automate Your Expense Process
Digitizing and automating your expense claim process basically entails getting rid of Excel sheets and paper receipts and having your employees do everything digitally. So when they get a receipt or invoice for office supplies that they purchased for instance, they simply take a picture of it and upload it to the expense solution. The data extraction technology (OCR) automatically recognizes the information on the document and sends it to the online dashboard, where it’s ready to get approved by a manager. After approval, the data is sent to your company’s accounting software, where the transaction is handled. Easy as pie, right?
The benefits of digitizing and automating your expense management are close to endless, but we will name nine that will help you get your employee spending under control.
- No more Excel forms or paper receipts that need physical handing in
- Fewer errors: employees simply take a picture of their receipt, the software automatically extracts the information and sends it to a user-friendly portal.
- Time and cost-effective accounting process: All receipts and invoices are processed with text recognition software (OCR), which leads to a cost reduction of up to 70%.
- More efficient authorization with digital workflows.
- Compliance-proof approval process with audit trails: Business rules determine whether certain expenses are approved or rejected automatically.
- Automatic detection of duplicates/fraud
- Google Maps integration: no more manual travel calculations
- Insightful dashboards with expense behavior
- Maximize VAT returns: If employers do reimburse costs without a receipt, this means they cannot deduct VAT.
Expense management platforms are built to improve the submission process but also to automatically enforce expense policies. Which brings us to the following piece of advice that will help you get in control of your spending.
4. Monitor Subscriptions Centrally
Keeping on top of every single payment made by all of your departments can be a mission impossible. Between paying for Albacross for sales, Google Ads for the marketing department, NMBRS for HR and InDesign for your design team, it’s easy to get lost.
The important part is to centralize the payment method for these subscriptions. If every team uses the same process, you know where every payment comes from and can easily stay on top of them all. Why stay subscribed to services that you no longer need? Or find out if competitors offer a cheaper or better service. Better to make sure these subscriptions are worth your money.
5. Prevent Expense Fraud
Trusting your employees is important, but it’s also smart to be realistic. A UK survey states that 85% of employees admit to lying on expense claim reports. Another 5% even falsify information “every single time”. Of course it is not always intended to be a lie, sometimes people forget details and just jot something down. Either way, it’s recommended that you do something about it.
Which brings us back to the first bullet point: digitizing and automating your expense management process. The Klippa SpendControl solution does exactly this.
Manage Employee Expenses with Klippa
Forget about the tedious process of processing and managing employee expenses. Trust Klippa SpendControl to automate all your expense management tasks and speed up your hour-long processes into several clicks!
Klippa SpendControl is an all-in-one digital pre-accounting software that combines expense management, invoice processing and business credit card modules.
Our software utilizes OCR technology for automatic receipt recognition to ensure accurate data capture and enable receipt scanning, approval, archiving, and booking directly to your financial administration.
With Klippa SpendControl you can:
- Manage your employee expenses, vendor invoices and business credit cards in one platform
- Scan, submit, process, and approve expenses via web or mobile app
- Submit bundles of expense reports for faster reimbursements of business trips or projects
- Achieve 99% receipt data extraction accuracy with Klippa’s OCR
- Regain control over your finances with intuitive dashboards
- Customize your approval management with multi-level authorization flows
- Automatically reconcile credit card transactions
- Never fail to comply with tax and data privacy regulations with our ISO27001-certified and GDPR-compliant solution
- Rely on automatic multi-currency support for international payments
- Prevent expense fraud with built-in duplicate and fraud detection
- Integrate SpendControl with your accounting and ERP software, like Quickbooks, NetSuite, or SAP
FAQ
Employee expense management is the process of tracking, verifying, and controlling the costs employees incur for business purposes, such as travel, meals, and office supplies. It ensures that spending aligns with company policies and budgets, minimizes errors, prevents fraud, and maintains transparency across financial transactions.
Accounting for staff expenses involves implementing a systematic process. This typically starts with establishing a clear expense policy to guide employees on permissible spending. Digitization plays a key role, where receipts and invoices are submitted through automated software that uses OCR technology for accurate data capture and processing. Approved expenses are reconciled against recorded transactions, ensuring compliance with budgets and simplifying the auditing process.
Controlling employee costs requires a combination of clear policies, budget management, and technological solutions. Establishing a comprehensive expense policy provides guidelines for spending. Setting specific budgets for categories such as travel and supplies helps prevent overspending. Automating the expense management process with platforms like Klippa SpendControl streamlines workflows, centralizes expense tracking, and reduces inefficiencies. Additionally, monitoring subscription payments and employing tools to detect fraudulent claims ensures financial discipline and cost savings across the organization.