Nitin Mittal Senior Manager, Assurance and Risk Advisory at Perfect Accounting .and shared services Pvt. Ltd. Read more…
Expenses and business activities go hand in hand. In order to ensure that the project or task is beneficial, the organization should incur cost of acquisition. Expenses are to be managed in an efficient manner in order to make the best out of the resources. This directly leads to ensuring proper result achievement. Some of the most crucial expense management best practices that benefit an organization and show visible positive changes are as follows:
Expense management can be a very tedious and complex process of management. Especially if a person who is not well-versed with the technicalities is responsible for monitoring it. An expense reporting program should be clear when it defines the kind of expenses and expenditures that fall under the category eligible for reimbursements. Expense management includes only those expenses which are in association with the business. It is important to remember that they do not involve your personal expenses. Moreover, the organization and department should incur these expenses only during the process of business activities. Bottom-line, the expense report program rules and regulations should be simple, clear and ambiguity free.
Your expense management procedure should not exhaust your employees with long and tedious efforts. It is best to keep the procedure as simple as possible. It is not mandatory that a good management system should be long and keep your employees waiting for acceptance approval. Make sure to only ask for those details which are necessary for managing business expenses in an effective manner.
The organization should develop a simple and easy method wherein the employees can submit their expense related reports. By reducing the amount of paper used in submission will increase the accuracy, efficiency and speed of reporting and submissions. By making use of paperless modes of submission will be easier and quicker than paper-based.
If the employees are submitting their expense reports in a timely manner, it becomes your moral obligation to respect their diligence and have a system in place to reimburse their expenses in a timely manner as well. In order to do this, it is important to remove the multi-layer approval process and allowing the reports to pass a wide array of parties.
Before you go ahead with establishing a strong foundation for expense reporting and reimbursement submission, it is important to make the expense management policy loud and clear to the employees in the organization. Always lay special emphasis on defining a clear and unambiguous expense management policy. It is, without a doubt, one of the most important practices of any organization. With clarity arises improvisation and better performance. Therefore, the duty of the expense manager, CA, Auditor or accountant is to ensure that the expense management policy is clearly communicated to all the employees within every vertical and function of the organization.
Therefore, with an effective expense management best practices system in place, the organization can effectively categorize expenses that may quality as tax write-off according to the IRS guideline.