- Be sure you follow the spending habits you set for your employees.
- Use your financial tools, such as credit cards and financial data, to help define and monitor spending habits.
- Collect receipts and create an approval process for all expenses.
Adopting responsible spending habits into your company's culture early can build a strong foundation for future success. This foundation can be especially valuable in times of market turbulence. Impress your investors and accelerate your growth with five tactics.
1. Define acceptable expenses
Invest some time in building clear employee spending guidelines for travel, entertainment and other purchases. Time spent establishing these rules reinforces the company’s commitment to careful spending. It may also cut down on spending misunderstandings, which burn cycles (and patience) to resolve.
The first step is to know and comply with the guidelines yourself. Update these rules as needed, and communicate clear expectations for expenses as your staff or business changes.
2. Issue cards ― with good controls
Teaching employees to pay with business cards can give you more precise control over spending when you set parameters based on job role. Developers, for example, can buy the tools and services they need within approved purchase categories. With salespeople, some companies find more success through setting spending limits. As your company grows, you can set similar controls for new employees and job roles.
Have each employee who receives a business card sign an agreement acknowledging that they have read your spending guidelines. This type of agreement typically includes their obligations and consequences in cases of unauthorized use.
3. Mine your data for insights
One big payoff of issuing cards to employees is that you can more accurately track how you’re spending. Cards can give you an abundance of detailed data. Even if you have just a few employees now, you can get into the habit of proactively using this data to understand where company funds are going and to look for opportunities to consolidate and streamline spending.
While data can show what your company is productively investing in, it can also help you catch and correct potential problems. Build reports so you can analyze trends and spot outliers, such as unusual expense categories or spending at odd times or on weekends. Reviewing reports by expense category also allows you to see quickly where budgets might be exceeded.
4. Insist on receipts
Get in the habit of requiring employees to submit documentation, such as a receipt or proof of delivery, that supports each expense claim. To prevent abuse through undocumented cash spending, you might require that business cards be used for even minor expenses. Mandating the use of cards also helps ensure that a merchant credit against a claimed expense, such as a refund for returned merchandise, goes back to the company.
5. Review and approve expenses
Ensuring that all expense reports are reviewed before they’re processed allows you to address out-of-policy spending when it happens. It also lets you grant some flexibility when rules are bent for a good reason. Review your co-founders’ expenses, too — and have them review yours. This helps to reinforce a culture of accountability and sends a responsible message to your team.
Putting these five good habits in place can feel challenging in a fast-paced, entrepreneurial culture that tends to celebrate disruption over following established practices. But company leaders who are bold enough to adopt solid policies around spending know that, in the long run, they are protecting the ability of the business to execute on its vision.
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