The Right Way To Perform Accurate Expense Reimbursement

There stands no doubt about how important it is to perform accurate expense reimbursement. Before the finance team processes the payments, they need to review piles of receipts, approve expense reports and validate claims. Even though it must be simple to perform the reimbursement process, it becomes stressful and tedious only if an organization’s reimbursement process is carried on with inefficiencies. This eventually results in delayed reimbursements and unsatisfied employees.

As per a study by the Association of certified fraud examiners, around 15% of business frauds arise from reimbursement, causing a median annual loss of around $26,000. Not even a single organization must overlook reimbursements as they might risk losing huge funds to expense fraud. However, you are seeking an easier way to manage the reimbursement process and maintain the integrity of your expense, management, operations, and data. In that case, there are some mind-blowing methods to simplify reimbursements for your organization, employees, and team.

Identify reimbursable expenses –

Whenever any employee incurs expenses in the company’s name and pays for them out of personal funds, the company legally must reimburse their employees with the full amount. However, an employee cannot claim reimbursement for each purchase; only the expenses made for business purposes will be reimbursed. Once an organization specifies clear boundaries as to what comes under reimbursable expenses. And what expenses are not to be refunded? They will lay off the burden of reimbursing irrelevant expenses. Some of the common reimbursable expense categories include –

  • Travel and accommodation
  • Means and entertainment during a business trip
  • Office and communication supplies
  • Medical reimbursements

An effective reimbursement policy –

When an organization implements an effective reimbursement policy, and the employees are aware of the policies and Adhere to them, they avoid overspending and do not run out of policy claims, which assists the finance team in processing reimbursements faster and with full transparency.

To begin with, ensure that your policy is comprehensive. Every organization must organize a companywide brainstorming session, including multiple stakeholders from the finance, HR, procurement, and legal teams. It Will help to create an easier draft and explain the policy better, along with acknowledging the employee’s perspective and ensuring the goals and priorities set for the reimbursement policy must be followed from both sides.

A few important roles that you must include in your policy are–

  • What expenses to reimburse
  • How to record and submit each expense
  • The process to submit receipts and other documents for proof
  • The time limit under which the expense Reports and documents must be submitted
  • How to gain expense report approval

Every employee must submit the expense reports on time since certain business expenses might be tax-deductible only when accounted for within the appropriate time frame. Moreover, your employees should also pay back any extra allowance or reimbursement within that duration so that the expense report is processed tax-free.

Once the reimbursement policy is implemented in your organization, do promote adoption among every employee and revise your adoption rates timely. Also, ensure to keep your expense policy easily accessible. Mail it to your employees, note it in your travel, booking tool, or expense management system, and put it. On your corporate intranet so that it is easier for your employers to access the policies.

Providing your employees with corporate credit cards is one of the most amazing ways to avoid paying reimbursements for business expenses separately. You can even set spending limits to prevent employers from making extra purchases from the corporate credit card. However, if the cost of availing corporate cards for each employer seems like a burden, issue them for employees who are regular travelers or Try direct deposits. When you make a direct deposit, it Eliminates and requires processing by directly transferring reimbursement funds into the employee’s bank account. It also has two major benefits –

  • Provides increased visibility of the finance team’s reimbursement process, simplifying auditing employee expenses.
  • Separating reimbursements from a regular paycheck helps save you and your employee’s additional expenses and income taxes.

Follow automated processing – you can reinvent your expense reimbursement with digitization And manage your finances in a better way. The most appropriate expense management software will automate and optimize end-to-end workflows within your finance management process. Employers can record and capture an expense with it whenever it is incurred through a mobile app. Your employers need not save receipts and documents anymore to prove their expenses for reimbursement.

For the finance team, when an expense report is submitted, they can go through it thoroughly through the software and pick out policy violations, and notify employees of any flags then and there. Moreover, the finance team gets digital copy with the software of the important documents along with notifications on deadlines and approvals for ensuring to not miss any report.

Expense reimbursement can greatly impact your employees despite following a routine accounting task. Any employee who complies with the terms and conditions policy can be best rewarded with a prompt reimbursement.

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