Regardless of the size of your company, every business incurs a variety of costs and expenses. These expenses will surely have an effect on your business’ taxable, income, however, if done correctly, the process can be simple and benefit the employer as well as the employee.
Incorrectly completed expenses can impact the morale and focus of your employees. It has a negative impact on company cash flows, too. Although you can’t ignore these incentives, employers must reimburse employees’ work-related expenses. This makes this process even more integral to your business’ cash flows.
What is expense reimbursement?
The process of expense reimbursement allows employers to pay back employees who have spend their own personal money for business-related expenses. Employees who receive an expense reimbursement usually don’t report these payments as income.
Reimbursable expenses tend to be a convenient solution to employees travelling for work, but can also be associated with purchasing work-related tools or supplies.
Accountable vs non-accountable expenses and reimbursements
Companies also have the choice between two types of expense systems: accountable and non-accountable.
An accountable policy is the more common option and likely the one you know: you go out for a team lunch, you keep a receipt, and after submitting it to your company, you’re reimbursed the full dollar amount.
Non-accountable policies, then, are plans that offer a specific budget for employees to spend. In a similar meal example, an employee might receive $200 per day for food on a business trip. If they exceed the budget, the employee will have to pay the remaining amount at their own expense. In this process, you don’t need receipts and the budgets allocated to employees are taxable income.
Travel and expense
T&E, or Travel & Expense, is considered the second-most difficult operating cost to control. Money can slip through your company’s travel and expense budget. To reduce costs and make things more efficient, here are some tips:
- Automating The Approval Process Through Technology – Automating the T&E spend approval processes through technological tools can improve cycle time and the number of FTEs that process expense reimbursements, as manual processes of approval such as email or paper expense forms cause delays and bottlenecks.
- Communicating and Implementing Clear Procedures – Communicating and implementing clear procedures for expense reimbursement throughout the organization that your employees can easily follow will relieve headaches when processing T&E spend.
- Ensure Proper Storage for Receipts and Documentation – Making sure the required documentation for T&E processing is crucial. One centralized receipt storage space makes processing easier. Some tools such as Procurify have image recognition systems that help store and read receipts for easy approval and reimbursements.
Using Procurify for expenses
As mentioned above, Procurify has built in tools to make T&E much faster and effective, although it doesn’t stop there. Procurify’s primary expense features are some of its most popular features, and can be done quite easily.
In the main drop down, fill in the form with some basic information and submit expenses for approval. By selecting account codes and even adding notes, you can automatically organize and track your expenses in a simple, easy to use app.