What’s in your wallet (to cover expenses)? – Part II

Read Part 1 of this 2-part series.

In this blog continuation, we’re talking about the tracking and handling of employee expenses.  When running a business, one of the things you definitely need to deal with is expenses of all types:  travel expenses, equipment expenses, facility expenses, subscription and association membership expenses, payroll expenses, and much more!   A couple of the expenses are predictable and handled directly by Accounting such as facility expenses and payroll expense.  Perhaps even subscription and association membership expenses are handled directly by Accounting since it’s a corporate expense to benefit all employees and the company standing within the marketplace.  So taking those out of the equation, how do you handle and track travel expenses and those pesky ad-hoc costs such as equipment rentals/replacements, conference registrations, printing and reproduction for customer deliverables, and a million other little things that can add up.

What it comes down to is 2 distinct requirement sets
1) Accounting tracking costs to the company for payment by bill type

2) Employees tracking employee reimbursement by type of payment used

Last week we focused on how the Accounting requirement is handled within companies.  This week we’re focusing on the other requirements:  Employee tracking concessions.  I’ve only seen a few companies approach this as it does not provide a benefit directly to back office operations but is strictly an optional employee benefit.  The employee requirement comes down to providing a service internally to employees to allow them to track how they paid for an expense such as cash, personal credit card, gift cards, etc.  This gives them a bill payment tracking mechanism where they reconcile their own personal expenses each month between credit cards and cash flow.  There are plenty of reasons you can come up with as to why companies do not handle the employee requirement such as

1) Employees do not want to share how the payment was handled personally

2) Employees feel adding the additional field on expense receipts is cumbersome and not a benefit

3) Employees may want to detail out items too much which is not scalable (i.e. specific type of credit card as an example)

For the most part, I believe providing the option to employees to use a more detailed personal payment type tracking is a benefit easily supported by the company.  If employees choose not to use it (meaning default their personal payment to a single value), then it’s no impact to anyone in the end.   What is a decent level of granularity?  I find the following values are pretty common and easy enough to use by employees for their own personal bill reconciliation

• Personal Credit Card
• Cash/Check/Gift Card
• Corporate Credit Card

Note that the corporate credit card is one of those areas that may be handled differently between companies as it depends on who is responsible for bill payment of the corporate card.  If the company is responsible for card payment, then the receipts submitted by employees are non-reimbursable and the responsibility of the company to pay.  If the corporate card payment is the responsibility of the employee, then these receipts are reimbursable to the employee in order for them to directly pay the bill (see last week’s blog on pros/cons in this area).

So now your employees have asked if you mind breaking down the Personal Credit Card item into types such as Mastercard, American Express, etc.    Or even breaking up the cash/check/gift card into individual dropdown items.  Technically this can be done with almost all systems but be careful in this area as now you are going down a path of trying to accommodate all kinds of unique items.  Is Visa detailed enough?  Do you need Capital One Visa AND United Mileage Plus Visa AND…… you get the point.   Here is where you want to keep in mind what the employees actually need:  a way to track personal expense payment types for reconciliation to bank statements, credit card bills, and so forth.  A good way to do this would be providing a free text field for the employee to handle that additional descriptive information.  This will allow them to report and organize their electronic receipts by general payment type then use the description or free text field to sub-group receipts for their own purposes.

Take a look at your expense policy when you get a chance and put yourself in the field consultants shoes.  Would you be able to reconcile your personal Quicken based on the payment tracking values? …I’m just sayin’!