Expense Management Tips for CFOs and Controllers

CFOs and Controllers do more than crunch numbers, manage a company’s budget, and protect its financial assets. They must capture key performance indicators (KPIs) that can inform the future course of an organization, however, they cannot achieve this without timely, accurate, and complete data. Since employee travel and entertainment (T&E) is a large expense for many businesses (payroll and benefits are the first), employee expense management is more critical than ever. Here are some tips to help CFOs and controllers streamline corporate expense management to gain greater control and faster, more valuable data for analysis.

Resource: How a Fractional CFO can enhance business growth

1. Review your accounting system’s organization

Typically, accounting systems have pre-designated accounts, but these tend to be general and, therefore, not relevant to your specific company. For example, “travel” could cover multiple expense types including airfare, rental cars, mileage, etc., and controllers need to know the costs for each type of travel. So, your chart of accounts needs to be more granular, based on where expenses fit within your budget, to accommodate a more detailed analysis of specific expense types.

The accounting system should be organized by reporting units that reflect how you review your data (departments, locations, company products, etc.). The chart of accounts will be utilized for each designated reporting unit. This provides visibility on exactly how much is being spent.

2. Develop a budget that follows your accounting system organization

Many companies don’t have a well-developed budget, making expense management much more difficult. Your budget in your accounting system should follow your organizational structure of reporting units and match the granular level in your chart of accounts. For example, if travel or meals and entertainment are broken out into sub-accounts, the budget should mirror that. This ensures consistent expense allocation and allows for detailed analysis.

Make budget development a group effort to foster inherent accountability. Involve managers of the reporting units affected (as noted above), and involve employees who will be doing the actual spending. By doing this, you can create a granular-level budget that truly reflects your organization’s reality. That not only supports accountability but also makes it easier to see anything that may be off during the review process.

Resource: Red flags to look for in an accounting department

3. Establish a clear employee expense policy

Without clear spending and reporting policies, employees can easily make mistakes, forget to capture data, or even fraudulently work your system to boost reimbursement. Chaotic expense capture can lead to inaccurate (and often delayed) reporting and analysis.

An expense policy should identify:

• What expenses are acceptable (or not)
• Spending thresholds
• The expense report review and reimbursement process
• Expected timeline for receipt submission and reimbursement

4. Use the technology available to you

Technology platforms designed for corporate expense management streamline this process. They make it easy and efficient to upload receipts right away, clearing the way for faster reimbursement with built-in parameters that eliminate the need for most pre-approvals and provide clear step-by-step instructions for users. Travelers can take pictures of receipts rather than collecting stacks of little papers and automatically organize them into an expense report that goes directly to the right person for approval and reimbursement.

A seamless automated system provides numerous advantages:

• Assured accuracy and completeness of data
• Elimination of human error when it comes to the categorization of expenses
• Timeliness—real-time syncing means account reconciliation, and monthly close processes can go much faster and more efficiently
• Earlier, more thorough financial review
• Enhanced quality control—built-in expense policies ensure all expenses meet company approval standards and have been reviewed
• Shared stewardship of bookkeeping that includes employees who are generating the expenses
• Automatic updates to relevant tax law changes (for meal deductions, for example), ensuring approvals are based on current rules

As technology advances across the board, it is key for you to have built-in review and compliance processes so that when an audit comes around, you can avoid write-ups for receipts that don’t comply with policies. To gain all of these advantages, however, it is critical that this technology be synced with your chart of accounts, just like your budget.  

Platforms designed strictly for expense management (capture and upload of receipts for reimbursement) can be useful but are often too limited. As controller, you need to track spending on hotels, rentals, and so on, but a platform that also addresses the logistical side of travel (bookings in particular) can help streamline and control employee spending end to end.

5. Choose the best technology for your company

• Every business is different, so think through aspects of travel that are unique to your company first, then look for software platforms that allow customization to meet your specific needs. The top priority must be the ability to sync with your accounting system.
• Take the time to review multiple options before making a decision. Try them out to get a true feel for how (or if) they might work for you. Most software companies allow you to test your own data in the system so see how it would work.
• Thoroughly train everyone who will use the software (travelers, internal managers, and yourself as CFO) on using the platform. Otherwise, it won’t serve you well functionally or as a corporate expense management tool.

With an inclusive process for developing the budget, broader accountability for spending, and technology that supports timely, accurate, and comprehensive data gathering, CFOs and controllers can take control over corporate expense management and make wise decisions on future spending.