Why Is Corporate Spending Compliance Important?
There’s this unfortunate sense that travel and expense compliance is either not that important, or not feasible. There’s a misconception that floats around the corporate world, especially in large organizations, that it’s just not a big deal if people are overspending or unaware of what travel and expense policies are.
This is problematic for so many reasons. First, when there’s non-compliance in any area of a business, it’s going to bleed into other areas. Corporate leaders may not even see a culture of non-compliance developing until it’s too late.
The same goes for fraud. Sometimes non-compliance is simply an issue of not knowing or understanding policies. With fraud, there is clearly something wrong happening, but if an employee or several employees are getting away with it, it destroys the corporate culture.
Employees start to see fraud happening, and they see no accountability for it. That then becomes an ingrained part of every aspect of the business.
Other reasons compliance is important is because of cost control, as well as employee satisfaction, travel experience, and safety.
Having corporate policies in place that employees are well-trained on lets them know what to expect when they travel, and how to make things go smoothly for themselves regarding things like reimbursements.
Both error and fraud can cost businesses thousands or hundreds of thousands of dollars a year. T&E is one of the areas where there tend to be the most errors, and also the most fraud.
So what can your organization do to improve compliance?
Evaluate Your Policy
First and foremost, how can you expect compliance on a non-existent T&E policy or one that’s outdated and irrelevant?
Before finance teams and company leaders tome together on compliance, they need to look the current policies or lack thereof. Where can changes be made? Is the policy detailed enough? Is it clear, or it does it leave room for gray areas or confusion? Does the policy cover all possible situations? How do employees feel about it?
When companies are going over T&E policies, they should get buy-in not just from the accounting department and leadership teams, but also the employees who are going to be following it. Ask them how they feel about policies as they presently exist, and what they’d like to see change.
During the assessment phase, you should ask employees where they feel frustrated with things as they stand currently because all of the input you receive is going to be valuable for developing training initiatives.
For future assessments and integrations of employee feedback, companies should consider putting formal input options in place. For compliance to approve, ultimately employees need to be happy. For employees to be happy, employers need to be listening to them. Travel managers or company leaders can implement easy online survey tools that they send to their traveling employees on a regular basis.
Do a Skills Assessment
Along with asking for input and feedback from employees, before you can change policies or revamp training on existing policies, you should see where skills gaps exist.
Where are your employees unclear on T&E policies?
Introduce New Training
With the importance of T&E compliance, what’s shocking is how few organizations even have formal training in place to address this topic. Employees may not be purposely ignoring policies. Instead, they may have no idea these policies even exist.
What tends to happen is that an organization will introduce T&E compliance training as part of onboarding, and then it’s not mentioned after that.
For training to be valuable in the business sense, it needs to be strategic. Specific, measurable goals need to be put in place whenever new compliance training is introduced.
For example, if cost savings is the primary goal companies need to have a baseline spending number and then a goal number. Following training, they can measure to see how well this goal was met.
Training can be done in a virtual environment to cut down on costs, make it more convenient and also to give the business more opportunities for internal visibility.
Show the Benefits of Compliance
For many employees, travel and expense compliance can seem like a broad, irrelevant subject. They don’t really understand the impact of travel policy compliance.
Show employees during the training and after training the very real ways that compliance helps the company, improves efficiency and also benefits them as an individual.
For example, during training highlight the fact that travel compliance can speed-up reimbursement times.
When businesses are training employees on compliance-related topics, they need to offer up not just the how’s but also the why’s.
Automate Expense Management
Everything in business right now is about data. Data allows businesses to see what’s happening, whether it’s spending, revenue, or employee performance. Expense management shouldn’t be left out.
The idea of using data was already introduced when talking about training. It’s essential to see the ROI for training on expense compliance. Automation is so important to achieving these objectives.
Automation lets finance teams see where they can reduce costs and other changes that might need to be made. Once this data is identified in the expense management system, it can be used to drive other decisions and actions such as the introduction of new compliance training.
Having automated expense management in place is valuable from the employees’ perspective as well. It makes it easier for them to do things like keeping up with their receipts as an example. Most modern expense management platforms provide tools that let employees snap photos of their receipts on the go and also submit expenses in real time from their mobile device.
Anything that is going to make employees’ travel and expense experience easier is going to make them more likely to stay compliant.
Finally, for compliance to work, there has to be buy-in at every level. Employees can’t see the CEO or CFO spending on lavish travel plans, while they’re incredibly limited in their booking options. Everyone in an organization needs to be dedicated to maintaining T&E compliance for it to become an ingrained part of the culture.