Manage Employee Spending Efficiently

Keeping T&E expenses to a minimum has long been one of the goals of organizations since they can spiral up to take a significant chunk out of the overall organizational spending. One of the ways to keep expenses down is to control extravagant employee spending, as this post states. However, there are other best practices that organizations can employ to control employee spending too. And we will list them in this post.

A Clear Policy

One of the biggest causes of overspending is company policy, or more precisely, the lack of it. An organizational spend policy will lay down the rules and guidelines necessary to manage expenses. It will explain the reporting relationships and other necessary components of the process like approval flows. In the absence of a policy, expenses management becomes chaotic. Since there are no rules governing spend, employees spend as they want, and expect the organization to reimburse them. Inflated expenses lead to broken budgets and reduced profits.

Therefore, the first essential task in expense management is to have a policy. This policy will guide everything. As a result, the whole process will have a design and structure that ensures that it runs smoothly.

However, it does not stop with making the policy. Organizations should have mechanisms in place to ensure that policy is being followed by everyone. So when a policy is not followed a strict action will be taken to handle the situation.

Validation & Verification

The major issues with expense management creep in when there is a lack of effective oversight, that is, validation and verification of expenses. The same happens even with the invoice management, where reconciliation of invoices plays the key role. Many organizations take these lightly since they do not have the manpower to go through all the expense reports and all the individual details of the expenses. Instead, what they do is random sampling, that is, pick a few at random and check them to ensure that they are pertaining to the organizational policy. This approach will not yield effective results, since random sampling might not point out all the errors, and there is also the issue of human error.

Therefore, what organizations need to do is to ensure that all the reports are being validated and verified, and preferably automatically, since there is no point employing resources just to pore over expense reports, and to eliminate the scope for human error.

This is where expense report software will be of big help. It automates these processes to a great extent and ensures that all the reports are verified and validated. It greatly reduces the time taken to do these tasks and therefore contributes to minimizing organizational spend.

Avoiding Extravagant Spending

As mentioned earlier, avoiding extravagant spending is one of the ways organizations can keep employee spending down. Lack of oversight and policy are some of the reasons for extravagant spending to occur, and when you control these aspects, you can control extravagance as well. Since policy will clearly show which expenses are legitimate and which are not, it is easy for employees to control their spending.

Also, imposing employee spending limits and setting up spend thresholds are other ways to ensure spending is not extravagant. By limiting the amount one can spend on, say, air travel, you can ensure that spend is being controlled. You can also go one step ahead and centralize all booking so as to ensure control and visibility. However, it is necessary to be flexible and practical when imposing limits and thresholds. You want them to be a guideline for employees – not obstacles. Further, you can also make teams and business units accountable for their own expenses so as to control extravagance.

Fraud Control

One of the reasons for overspending is fraud. You set your yearly budgets, and you have audits to ensure that budgets are being followed, and everything seems nice on paper but spend is still out of control. A reason? Lack of fraud control. Many organizations believe they will not be victims of fraud, but this is a misconception. There are no special circumstances leading to fraud, it can happen everywhere in organizations of all sizes. Mostly, it happens in accounts payable, where you don’t have visibility and control over the payables.

Even if your employees never commit fraud, it is still a good idea to have fraud control measures in place. Some of these include multiple verifications and validations, complete visibility, and periodic audits. Further, you can centralize tasks so that individuals will not have much of a say in how the process runs – the system does.

Employee Spending Analytics

Analytics has been useful for managers and decision makers but they have been limited in application. Also, they were time-taking and were not available to all, and hence, the benefits of analytics have been limited.

However, with the proliferation of online expense software solutions, all the stakeholders have access to analytics. So they can easily run analyses and come up with insights that help them in their decision-making.

For example, say you wanted to compare the employee spending among your various business units to see which one is not being able to control its expenses effectively. If you don’t have the software, you would have to delegate a resource to mine all the expense tallies of all business units and go about comparing them. Instead of this manual process which can take hours, you will be able to complete the calculations yourself in seconds when you use the software’s analytics.

Also, sharing results of these analyses with peers is quite easy. This way, everyone is kept informed, and decision-making is that much more collaborative and improved.

How Expense Software can Help

Expense report software is a very handy tool for organizations in controlling expenses and eliminating many of the issues that creep up in the course of the process. It helps with all that we mentioned in this post. You can prepare and implement an organizational spending policy effectively, automate your verification, validation and approval processes. Thereby reduce the amount of time and the number of resources required for the same, and analyze the process to come up with patterns and insights.

Further, expense management software also brings you a lot of conveniences and equips stakeholders with new skills. Employees can delegate their approval responsibilities to their peers when they need time off so that the approval process will go on regardless. Also, since the software will help with approvals and validation, tasks are completed much more quickly.

Improved Communication

One aspect of the software that should be highlighted is its ability to improve communication and collaboration among the stakeholders in the process. In expense management, there are a number of sub-processes. And many of them are sequential, and therefore, it is not enough for a task to be completed; this completion should be communicated to the stakeholders so that they can start their tasks.

However, this communication is not always smooth, and it is not uncommon for communication gaps to occur. Instead of leaving it to individuals, the software will handle this communication. Alerts and notifications are shot to everyone as soon as tasks are completed. And they’re also notified when it is time to complete their tasks.

In terms of collaboration, what expense software offers cannot be matched by spreadsheets and other standalone solutions. It offers a single interface for all the stakeholders to complete their varied tasks. Traveling employees can easily prepare their expense reports, supervisors can complete approvals, and finance guys complete their reimbursement tasks through the software. Thus making it a comprehensive one-stop solution for all expense management needs.


All in all, controlling expenses is not going to be easy without the right policies, practices, and tools. Deploying expense management software can help businesses manage to spend better. They can do this by leveraging fraud control mechanisms, automatic policy enforcement, and comprehensive reporting features. However, when you have all of these in place, the process can take care of itself.

Kevin Peterson
Kevin Peterson is a content marketing enthusiast, freelance writer at SutiSoft, specializing in Business, ERP, Technology and Cloud/SaaS trends.
Kevin Peterson

Latest posts by Kevin Peterson (see all)

Let's be inbox friends!

Let's be inbox friends!

Drop us your email to receive a weekly digest of our latest blog posts right in your inbox.

To confirm your subscription, please check your email.