A little leads to a lot
On the face of it, expense management is a basic task. But while it’s certainly true that individual expense processing is perhaps best left to the more junior members of the team, it’s also the case that finance leaders should be closely involved when setting the policies which govern the overall system. Without a strategic, management-approved policy in place, finance leaders could soon find themselves with an expense-related black hole due to the aggregation of many smaller claims. With one recent survey finding that £1.9 billion is lost through non-approved expense claims every single year, the problem is real and pressing!
That’s also where having a transparent, accurate and real-time data system in place to monitor how much is being claimed is useful, as it means finance leaders can assess what expense limits are realistic and then introduce them in a way that won’t provoke staff complaints. Making the expense management system as electronic and automated as possible also reduces the risk of data input errors, too.
Tax implications
Expense claims can also have strong taxation implications. Everything from subsistence costs during work travel to staff training can potentially reduce your corporation tax bill, so it’s wise to ensure the process is managed correctly and that good records are kept. Again, a centralised data system which allows finance leaders to quickly find the expense expenditure information they need to appropriately calculate the firm’s obligation when tax return time rolls around is wise.
Controlling cash flow
In most circumstances, a successful firm of medium or large size won’t need to be too draconian with its expenses policy. But for a firm which has a tight cash flow, each and every pound could count. Ultimately, the buck for an overly-generous expense policy will stop with the finance leaders – so washing your hands of it or failing to take a strategic, profit-focused approach might be risky.
Expense management involves a lot of transaction authorisation for small amounts, and it’s a pretty repetitive task. But just because it’s routine doesn’t mean that it isn’t also a matter for strategic thinking: whether it’s the use of precise, pinpointed data or the management of the process for tax purposes, there are plenty of ways in which strategic thinking can be applied to even this most mundane of jobs.
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