Mad Money: How to Manage Expense Reimbursements from Multiple Employees

Depending on your business, you may have employee-initiated expenses, which need to be tracked, analyzed and controlled. Especially important is keeping an eye on travel, supply purchases, unintentional reporting errors, unused discounts and rebates, and other potential costs. The problem: How do you effectively manage it? Below are several feasible methods to track and monitor the costs associated with expenses from various employees.

Policy Development

One of the most important control tools that you can implement is a clearly defined policy that outlines what expenses employees are allowed to incur on the company's behalf and under what circumstances.

Also, travel and entertainment policies and procedures provide employees with a basic guideline for appropriate travel and entertainment expenses and reimbursements. It's recommended that your guidelines detail items, including:

• who is authorized to travel and under what circumstances
• who must approve travel
• how employees will be reimbursed
• how employees should document their travel (i.e., receipts)
• what items are covered under company travel (i.e., transportation, lodging, meals)
• what prearranged services must be used (i.e., travel agency) to ensure the best rates

In addition, travel and entertainment policies and procedures should explain what steps need to be taken to be reimbursed after traveling, such as:

• what form should be used
• how soon the form must be submitted to be reimbursable
• who can authorize reimbursement

Petty-cash policies also teach employees how to utilize company funds to purchase needed supplies and their obligations in doing so. For tips on how to establish and manage a petty-cash account, check out our companion article, Setting up a Petty Cash System.

Expense Forms

To track travel, business owners should implement a system of checks and balances, which include travel-authorization and travel-reimbursement forms. For instance, travel-authorization forms require employees to receive approval before traveling or committing to travel (i.e., booking airline or hotel reservations) and require the signature of the proper manager. Once travel has been authorized, employees can make their travel arrangements according to company guidelines. If personal expenses are incurred during travel (i.e., meals, dry cleaning), the company travel policy should outline what is reimbursable and how to complete travel-reimbursement forms.

Additionally, petty cash vouchers allow an employer to track who is authorizing petty cash payments, for how much and for what purposes. Also, monitoring smaller, spot purchases enables you to determine if a better system of bulk purchasing is necessary to ensure employees don't run out of basic supplies and that you're receiving the best rates for routine items.

Automated Systems

Systems with online access to policies, procedures or Microsoft® Excel spreadsheets enable employees and employers to manage expenses quickly and easily. In addition, using automated systems allows employees to correctly tabulate entries, thus reducing the risk of unintentional errors.

There are various online and desktop expense-report software solutions that can assist you; it's a matter of identifying what would work best for your company. Websites, such as The Software Network, can also help you identify possible suppliers.

Before you start soliciting quotes, consider the type of expenses, number of employees at your company, and report requirements. Talk to those in the know - colleagues, financial experts, your accounting firm - for referrals and suggestions. Effectively managing expense reimbursements is a matter of designing a system that includes policies, procedures, checks and balances to help employees stay accountable for their company spending habits.