Kiss Common T&E Annoyances Goodbye
Five steps show you how.March 1, 2012
by Mary Schaeffer
Expense reimbursement for employee travel is a necessary evil. Almost every organization deals with the aggravation created when employees push the envelope with their requests for reimbursement for travel and entertainment expenditures. Many times these employees plead ignorance, while other times company policy is less than crystal clear. And finally, some firms have policies that encourage such behavior.
Below are five easy strategies your organization can use to create a more tranquil T&E reimbursement process:
Step 1. Publish the cutoff schedule for check runs and reimbursements. More than occasionally traveling employees are not aware of accounts payable cut-off dates and therefore don’t get their requests in before your deadline. By informing all traveling employees of deadlines, some of the reimbursement hassles will go away. This can be done by publishing the cut-off dates as part of the policy. Send reminders the week before month-end cut offs and provide it to tardy employees to avoid future problems.
Step 2. Eliminate all cash advances, if your organization still gives them. Cash advances sometimes encourage late expense reporting as well as creative expensing. This is especially true if part of the advance remains and must be returned. They also waste a good deal of time for the organization because someone has to create and track them as well as ensure that they are returned within a reasonable time period. Additionally, they can be a drag on the organization’s cash flow, albeit a small one.
Step 3. Consider per-diems. If you are having constant problems with employees spending more than they should on meals and incidentals when traveling, a flat reimbursement amount solves the problem. As long as the amount is equal or lower than General Services Administration (GSA) levels, you’ll have no problems with the IRS. It will also make the T&E reimbursement function operate a little smoother because there won’t be any checking of receipts, complaints about extravagant spending or the myriad complaints that accompany the reimbursement process.
Step 4. Update policy and include as much detail as possible. By spelling out what is allowed and what is not, nothing is left to the employee’s imagination. There are no decisions for them to make. Any time you have a problem with a reimbursement and discover it is due to poor or vague wording in the policy, update the policy and distribute the change to all affected parties. Also share the T&E policy with everyone who might have a need to see it. This includes administrative assistants who frequently complete their manager’s reports as well as those who travel only occasionally. Many organizations post their policy on the organization’s intranet site while a few also post them on their external website.
Step 5. Lower the receipt level to $5 or $10, especially if you currently have it set at $25. Require them even if you just spot check them especially because industry reports show numerous complaints about excessive reimbursement requests just under the receipt level. If your organization is not bothered by this issue, then clearly you will not want to change the receipt requirement level. However, it should be noted that the IRS changed the receipt requirement in 1995 to $75, but few organizations have followed its lead, with most still requiring receipts for all out-of-pocket expenditures over $25. Most experts fear that reimbursements will skyrocket if the change is made in their companies to match the IRS levels.
Using these strategies will not end all your T&E headaches, but it will put a major dent in the problem. For many of you, executing them may simply be a matter of getting management approval and support. Best of all, these tactics cost nothing to implement. Eliminating cash advances and lowering receipt levels may cause some short-term pain as those affected bellyache. But in the long run, your reimbursement function will operate more smoothly. We recommend you bite the bullet and implement as many as you can.
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Mary S. Schaeffer is the author of over a dozen business books including Controller & CFO’s Guide to Accounts Payable (John Wiley & Sons) and Fraud in Accounts Payable: How to Prevent It. She is the publisher of the CFO & Controllers Accounts Payable Management Journal and writes a monthly newsletter, a free weekly ezinee-AP News, speaks at accounts payable webinars, seminars and conferences and directs the organization’s consulting practice.