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.
Expenses that are done incorrectly or aren’t done at all can impact the morale and focus of your employees, and have a negative impact on company cash flows. While these are definitely incentives not to ignore, in certain states, employers are legally required to reimburse employees work-related expenses, making 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 that receive an expense reimbursement usually aren’t required to 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
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 may be given $200 per day for food on a business trip. If this budget is exceeded, the employee will have to pay the remaining amount at their own expense. In this process, receipts aren’t required and the budgets allocated to employees are taxable income.
T&E, or Travel & Expense, is considered the second-most difficult operating cost to control. Your company’s travel and expense budget is one of the key places where money can slip through and not be accounted for. 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. Having one centralized storage space for receipts can make processing a lot 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.
By accessing the main drop down and completing a simple form fill with some basic information, you can easily submit expenses and get them approved with only a few clicks. By selecting account codes and even adding notes, you can automatically organize and track your expenses in a simple, easy to use app.