Promoted by Qantas.
Reimbursing employees for on-the-job expenses need not be the time and money-guzzling task it can appear to be.
Expense processing no small feat
Businesses spend a huge amount of money each year reimbursing workers for on-the-job expenses they have paid. While no single agency tracks exactly what this amount is, looking through the ATO website on fringe benefits tax rules, employee reimbursement requirements and deduction versus expenses outlines, it is abundantly clear that this is no small process for the collective business community.
Among the most common expenses reimbursed by businesses are:
The hidden costs of managing expenses
It is not only the expenses themselves that cost a business, but how they are processed can also have a direct impact on profitability.
When staff expenses are being processed, there is likely to be higher costs or lost earnings resulting from:
How can employee expenses be managed?
The most common method is for employees to provide their own receipts, and the accounting department then reimburses this as one lump sum into employee bank accounts, either at regular intervals (such as weekly) or alongside the regular salary payments.
Yet despite being the most common means, it is also the most cumbersome.
There are other options available to businesses or virtually any size, including:
To process in-house or outsource?
Whether your business decides to retain direct ownership of expense management or outsource it either to a digital platform or relevant bookkeeper, a number of factors should be taken into account. The volume of expenses and their value, the number of employees claiming expenses, cash flow position and the size of the overall business can all influence this decision.
The pros and cons of each method should be considered before determining the best approach to managing staff expenses in your business:
An established consulting firm sends staff all over the country, and occasionally overseas, as part of its regular operations. As such, travel, on-the-road expenses and client entertainment are regular and significant costs for the firm and its employees.
Traditionally, these purchases were made by individuals and the claimed back through the firm’s internal accounts department, which created significant paperwork and efficiency constraints.
Chris, the firm’s owner and managing director, undertook a review of other options for streamlining staff expenses and decided that the use of corporate credit cards best suited the high-volume needs of his business.
As a Qantas Business Rewards member, Chris reviewed the business credit cards offered by Qantas partners decided on the American Express Qantas Business Rewards Credit Card. Each consultant within the firm received their own card and were advised to use it for all work-related expenses going forward.
For longer trips where flying was not an option, Chris implemented a new policy requiring staff to rent a vehicle rather than use their own. To further maximise his Qantas Business Rewards membership, he enlisted Qantas partner AVIS as his firm’s preferred car hire business, and Qantas Hotels to book accommodation, meaning that his business earns Qantas Points on top of those that his employees were already earning themselves on these bookings as Qantas Frequent Flyers.
Several months after the change was implemented, Chris has seen an uplift in business productivity, while tensions and complaints by employee about late reimbursements have been eliminated. Most significantly, though, Chris and his team have found themselves with much more time to deal directly with customers and revenue-generating activities. Likewise, the accounts team have been freed up to concentrate their efforts on processing invoices and payments, directly contributing to an enhanced cash flow position.
Feedback from Chris’ staff has also been overwhelmingly positive. They are enjoying the streamlined reporting process and not having to adjust personal cash flows to cover work expenses. And, just as the firm is earning Qantas Points on its spending, so too are the staff now earning their own points.
HUB24 has confirmed the acquisition of Class as the platform provider looks to establish itself as a market leader. ...
A couple is suing Dixon Advisory for poor retirement advice which left them $900,000 worse off. ...
A white paper issued by the Financial Services Council (FSC) which proposes a new advice framework has been widely praised. However, the director of a...