Spend Less on the Company Credit Card
This article was updated on Oct. 12, 2018.
Looking for employees to spend less on the company credit card? When employees are spending the organization's money, they typically aren't as careful as when spending their own. Lavish dinners, entertainment or other unwarranted expenses can quickly erode your expense budget. So CFOs and CHROs need to work together to encourage employees to spend frugally while traveling on the organization's dime.
These five strategies can reign in travel and entertainment expenses.
1. Re-evaluate Reimbursement Guidelines
The Finance and HR teams should look at corporate policies regarding reimbursement to see if changes are necessary. Uber and Lyft might offer newer, less expensive options for travel to and from airports than what is included in current company guidelines. Similarly, shuttles are far less expensive than taxis, but are usually slower. Some major cities such as New York, Chicago and Atlanta offer public transportation that is superior in terms of time and cost for travel between the airport and city destinations, so it's critical that your employees have all the facts before they embark on their trip and start making spending decisions.
2. Set Alerts on Corporate Cards
Credit card issuers enable you to set dollar limit alerts for charges on corporate cards as well as specific spending limitations for different cardholders. Don't set notification limits too low or you'll receive plenty of unnecessary notices, making it less likely you will spot the truly important ones. But by setting different limits for specific employees, you can authorize higher limits when needed.
3. Establish Meal Reimbursement Limits
If your organization isn't using corporate cards then set limitations in other ways. As you establish reasonable reimbursement rates for meals, travel and incidentals, you can look to other organizations for benchmarks. Many colleges and universities have limitations clearly outlined on their websites. For example, the University of California Irvine has meal limits ranging from $27 for breakfast to $81 for dinner. On the other hand, Penn State University uses federal per diem guidelines. The federal government also provides guidelines for its employees. Some organizations also list reimbursement information on their websites. Your own organization's budget will differ, but these sites provide a solid framework to build on.
4. Consider Per Diems
One way to encourage employees to be more frugal with business dollars is to give a per diem rather than reimbursement. The per diem limits how much the organization will spend on the employee's expenses, so if the employee wants an expensive meal, they would simply have to pay the difference. However, be aware of federal tax rules by the IRS on using per diems instead of itemized expenses. Loop up with your HR leadership to make sure your plan is in compliance with these rules so your organization receives the expected tax benefits.
5. Use Checks and Balances
Tempting as it may be, don't rubber stamp reimbursements. Employees can innocently or not so innocently submit duplicate receipts or may not be vigilant about obtaining them. This is where a uniform policy comes in. Clearly define procedures for reimbursement in employee handbooks and make sure employees abide by the rules.
You should also adopt technology to simplify checks and balances to eliminate the need to track paper receipts. Technology solutions, such as mobile expense apps, ensure that employees and managers can directly reconcile expenses right in the app after the completion of travel, delivering electronic receipts into expense report systems. These mobile apps also give managers the ability to review and approve expenses without the need for an additional layer of communication. If everyone in the organization utilizes a unified system, it is much more likely that mistakes can be found quickly and corrections applied without sacrificing productivity.
By following the above tips, your organization will spend less on the company credit card while making more effective use of your travel and expense budget. Work with your HR department to carefully educate employees on guidelines when traveling and be open to hearing feedback from employees about their experiences. Comfort, happiness and flexibility when traveling can often be well worth the expense.
