The idea of managing reimbursement of expenses causes confusion, stress, and mountains of jumbled paper receipts. If this sounds familiar, it might be time to reconsider how you carry out your reimbursement procedure. By adopting minor changes to your reimbursement method, you might deliver better employee experiences and cause less strain on your team.
Payments made by employees while travelling for business meetings or purchasing items for the company are eligible for reimbursement of expenses. Such monetary returns are given to employees as compensation for personal expenses incurred while performing their job-related tasks on behalf of their company. The reimbursement is done because such expenditures are not factored into their regular salaries. In this blog, we will learn how to optimize reimbursement of expenses.
What is reimbursement of expenses?
Employers reimburse employees when they spend their own money on work-related purchases. These expenses can also arise when a person works remotely and needs equipment immediately or pays for a service or certification that enhances their work. These costs are often incurred when an employee travels for business.
Most businesses have a policy that specifies what expenses are eligible for reimbursement, establishes the limits on reimbursement amounts, and determines the steps employees must take to submit and get their reimbursements.
Benefits of streamlined reimbursement of expenses
1. Promotes financial stability and efficiency
Employers will improve productivity and efficiency, make smart business decisions, and cut expenses involved in operational costs by using the expense management system. Businesses that switched to a cloud-based expense management solution experienced an optimum return on investment within a year.
2. Streamlines workflow automation
Since there are several steps in a reimbursement process, there are multiple chances for errors and inconsistencies. It can be difficult to manually enter and verify data, which might result in hasty decisions that are prone to mistakes. Therefore, many businesses these days use software and platforms that help in easy management and reimbursement of expenses.
3. Reimburse faster and boost employee satisfaction at work
Employee productivity, engagement, and happiness are significantly impacted by how supported and capable they feel of carrying out their responsibilities. Employers can reduce the time between incurring costs and employee compensation by using reliable software for the reimbursement process.
4. Enforce the expense policy and prevent non-compliance
Employers must have a concrete policy for reimbursement of expenses, which also safeguards monitoring reimbursement requests carefully. You can enforce your expenditure policy while avoiding legal and non-compliance issues when your expense management solutions are tailored to match your company’s travel and cost standards.
5. Increase operational effectiveness while lowering the administrative burden
It eliminates the manual expense process and gives managers a complete and consolidated insight into expenses, which aids in the paperless process. Bulk expenses can be combined for processing and settlements, and expense allocation automatically enables reimbursements from the entry point to your general ledger.
A step-by-step guide for the expense reimbursement process
1. Create a process for reimbursement of expenses
Create a reimbursement of expenses policy that is simple to understand and follow. Distribute it to your staff and let them know about it. The expenses that are eligible for reimbursement, the rules for filing a claim, and the deadline for providing reimbursement information are just a few crucial details that need to be clarified and managed.
2. Establish which expenditures the employee should claim
Establish clear guidelines on what expenditures can be claimed as legitimate. Travel and lodging expenses, office supplies, phone bills, and expenses for entertaining customers are all often eligible for reimbursement.
3. Establish a procedure for compiling claims for employee expenses
After the expenses have been incurred, an expense reimbursement claim report must be filled out and submitted by the employee to HR for approval. Provide clarity on the details required for filing cost claims.
4. Verify the legitimacy of the expense
For the employee to gain clearance for their claims and see their reimbursement in that pay cycle, set and explain timelines for expense report filing – such as submitting claims at least one week before the upcoming payday.
5. Pay reimbursement within the given timeframe
Establish a transparent process that communicates the estimated timeline for reimbursement of expenses. Inform them of the payment method – whether it is a cheque or direct deposit – and how they can access a transaction record for the same.
Technology now offers more accessible alternatives to simplify manual business operations. For example, automation of reimbursement of expenses would not only increase employee compliance but also make it simple for businesses to create IRS-mandated expense reports. Additionally, this will assist business owners in keeping track of their costs and maintaining the stability of the company’s finances.
Select EnKash, a dependable spend management platform that enables you to streamline your company’s reimbursement of business expenses process from beginning to end. With the use of their corporate credit cards, EnKash makes managing and reimbursing business expenses simple. Explore their website today and make reimbursement of expenses an efficient process for your company.