How to save thousands on your employee expenses bill
It’s not often you can provide demonstrable evidence of just how valuable reporting on, and analysing, expenses spend can be. We know anecdotally that using a cloud-based expenses solution will save an organisation money, not least because it can help improve VAT reclaims on employee expenses.
One organisation, Livewell Southwest, is now saving thousands of pounds each year on its employee expenses because it now has insights into where expenses spend is happening. In fact, the annual savings in just one area of the business add up to around £19,000 by introducing two pool cars to be used by two community-based teams, instead of having them use their own vehicles.
Prior to analysing and reporting on expenses, Livewell Southwest was paying £36,000 in travel expenses for the two teams annually.
I lead with this example first to demonstrate just how powerful reports can be.
Unfortunately, Livewell Southwest is, in our experience, still in the minority of organisations that is proactively reporting on its expenses bill. Most companies aren’t reporting on expenses nearly as much as they should.
When we talk to FDs and CFOs they tell us that they, and their payroll teams, don’t feel they have the time to look at expenses in more depth. I can certainly understand why, there are so many variables in any expenses claims that beginning the process of reporting can seem both daunting and a potential waste of time.
But taking the above example from Livewell Southwest, I’d argue that this alone should be compelling enough to set aside some time to start your reporting processes. It can, and will, help your organisation identify cost savings.
Here are my top tips for financial directors and their teams to start the process.
Make sure you have the data to report on
It may seem like an obvious statement, but if you aren’t already collecting the information on expenses such as how much is spent, where it’s being spent, and what the reasons for the claims are, then your reports are going to be challenging to develop. Splitting out expenses via category (subsistence, mileage, accommodation, entertainment etc.) is the first step and, I’d argue, the more you customise the categories the better information you’ll get from your reports.
Understand what you want to find out
It’s all very well running reports on the information you have, but these reports are answers to questions you need an answer to – which employee is the biggest spender, which department has the most claims, where or with which companies are employees paying for services? To get the most out of your reports, make sure you’re asking the right questions.
Filter the information
If you’ve got all the information you need and know what you’re trying to find out, then start to add filters to the data so that only the relevant information is presented. We’ve all been in the situation where we’re faced with pages upon pages of information that’s useless, looking for the few entries we need. Reporting on expenses isn’t about creating more work for you or your teams, it’s about understanding expenses better, with the aim of finding improvements.
Don’t punish staff to save money
There are numerous ways organisations can improve their overall expenses management processes. It isn’t about cutting back on expenses or allowing employees to claim for fewer things, it’s about using the information to proactively put measures in place to improve processes, that usually will reduce the monthly bill.
Such examples would be to move employees to use fleet, hire, or lease vehicles instead of their own vehicle; or if your employees regularly visit certain businesses (hotels for example) then contacting the business and trying to negotiate preferential rates for frequent use; or even just making sure that mileage claimed is accurate rather than estimated. Companies can save 15-20 per cent on mileage claims through using an automated solution vs. paper-based expense claims.
Ditch the paper
John Pascoe, Livewell Southwest’s Contract and Performance Manager told me recently “On top of the challenges of lost forms or incorrect expense claims, the other issue we encountered [with having paper-based expense processes] was we didn’t have any real insight into what people were doing. We didn’t have any intelligence on which teams or individuals were putting in the biggest claims and with so many claims submitted each month it was impossible to make any analysis of the data.”
Taking control of your expenses to make it work for you is now easier than ever thanks to cloud and software-as-a-service technologies. Investing the time and energy now to report on your expenses spend can, and will help you save thousands.