Knowing Your Way Around Expenses

Expenses used to have a good reputation, as a legitimate way to compensate staff and managers for any out-of-pocket expenses they incur (as we all do) in the course of our day to day jobs.

Unfortunately recent press coverage of expenses abuse, from parliament to big business, has dented the reputation of the Expense Account and its place in the workplace. However, it's still very relevant and necessary to have such an account in today's world, and if you're a non-financial manager with the power to authorise expenses, you ought to learn a little about them at the very least.

Not everyone these days drives a company car, has a company phone and a company credit card. Those who do are actually relatively easy to take care of - you can check the itemised bill for any discrepancies. It's the smaller expenses that you should keep track of.

A good example is mileage, which is when someone uses their own personal car to undertake a work-related journey - not their journey to or from work, of course, since we're all expected to pay for this, unless we're "away from base". For example, if your head office is in London but you have a series of meetings in Glasgow, then an employee is perfectly valid in wanting to either claim their flight or mileage for the journey as it's not in the normal day to day schedule that they work.

Food and drink is another issue that ought to be looked at carefully, because if people get used to the company paying, they may be more extravagant than normal - because it's not their money. Not all employees do this and some are actually more frugal when using expenses, but this isn't always the case. Set an expenses policy and stick to it.

It may be worth mentioning that most "entertaining" costs such as food and drink outside of work hours cannot usually be legitimately included in an expense account unless it's for good business reasons. Alcohol is an especially carefully monitored item where expenses are concerned, and it should come as no wonder!

Beware of petty cash in the workplace - this used to be an accepted and common practise but these days, with the advent of so many electronic payment options, sometimes it's a bad thing. Cash can be very hard to track and even harder to justify claiming back on expenses if you don't have a receipt. Which highlights the most important part of expenses from a manager's point of view - the paper trail.

Wherever possible, get a receipt, bill, or card statement to back up anything spend on expenses. IF an employee consistently fails to provide proof of what they have spent company money on, then remind them of your expenses policy - and if you don't have one, draft one straight away - since almost all companies need one. If you have no policy, you have little hope of getting the money back.

Thankfully, expenses abuse is rare but when it does happen, it can be detrimental to both your balance sheet and also the reputation of the company. A good policy combined with good monitoring of expenses should mean that you never have to see the negative side of it in the workplace.