Managing employee expense reimbursements

It is normal for employees to pay for work related expenses out of their pocket. As an employer you would have to ensure that these expenses are duly reimbursed and hence the need for you to have an employee reimbursement policy at your organisation. This article aims to set out how you can establish an employee reimbursement policy so that you can keep your employees happy and ensure there is no adverse hit to your costs.

Having a policy in place will act as a safeguard from fraud as there is a possibility that employees may claim fictitious expenses, manipulate bills or submit bills relating to personal expenses. Moreover, it would improve overall efficiency as employees would be less likely to submit claims for expenses that are not covered by the policy.

This would reduce the time spent by the employee, approving Manager and Finance Team in relation to processing claims.

Below you would find the recommended tips to better manage employee reimbursement at your organization.

1. Define reimbursable expenses

First identify common expenses that that are claimed for reimbursement at your organization. Review the expenses to identify what would and would not be covered under your reimbursement policy. Some examples of reimbursable expenses would be transportation costs, meal cost, stationery cost and communication cost.

2. Establish limits

To prevent employees from misusing the reimbursement policy ensure that you set clear limits on your expense so that no employee overspends on purpose to exploit this. Where required have a maximum limit for expenditures. For expenses like international travel a per diem can be established.

3. Set out a process

Have a system in place for employee reimbursements and educate your employees on the same. Employees should be informed on how they need to submit their reimbursement claims and who needs to approve it. Also the employees should be notified on how claims will be paid i.e. whether separately or if it will be added to the payroll.

You can consider automating the process with the help of an expense management tool which would reduce manual work involved in this process. The receipts can be viewed digitally any time reducing the need to maintain hard copies.

4. Track expenses

Keep a watchful eye on the claims made and flag down any expenses that do not meet your reimbursement policy. This can be simplified with the help of an expense management tool.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Impact of Training & Development to an Organization

Training and development is an indispensable activity in corporate world. However, training and development is one of the lowest things on the priority list of most companies; though this is at the persistence of the HR department organizing proper training and development sessions for employees.

Training allows employees to acquire new skills, sharpen existing ones, perform better, increase productivity and be better leaders. In certain instances, the impact of training and development will not yield overnight. It will be an investment over the time to maintain consistency in employee contribution and work quality.

We at SandS have noticed that most business owners are reluctant to spend on training and development activities and they consider it as an expense not as an investment.

This article summarises the benefits and different ways of conducting training and development;

1. Addressing short-comings

Make the purpose of the training to iron-out weaknesses of employees based on departments or designation. For an example trainee telecommunication associates will significantly lack telephone etiquette; because, they join as trainees. Their training should be detailed oriented compared to executive levels.

2. Positive Employee retention

Adding training and development to an employment contract will gain employee loyalty. Professional development will enable employees to perform their tasks accurately and this will enable them to get promoted for the work done as well.

3. Empowering Employees

Train leadership skills to employees. In return, they can inspire, motivate and mobilize their team members with a compelling vision. This will increase the organisation’s performance and results.

4. Increased employee engagement

Once training and development sessions are conducted; there should be a mechanism to track the effectiveness of employees at work place. This should also be combined with the appraisal system. This will increase positive employee engagement at work.

Written by Nara, ACMA, CGMA (CIMA-UK), MBA (ICFAI University). Nara is a Commercial Accountant at SandS Australia. She has 15 years of experience in business, finance and accounting in senior managerial roles helping analyse, identify, and drive business growth

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Optimizing your Accounts Receivable

Efficient account receivable management is an integral component of managing the cash flows of any business. Poor invoicing or collection processes can result in lost revenues and liquidity problems. If the liquidity issues prevail, the company may face risk of bankruptcy.

Any business needs to have a defined policy on how accounts receivable will be managed. If a policy is not in place, profitability could be adversely affected as the Company may have to incur additional costs such as collection costs and bad debt losses. Capital costs may rise as they would have to resort to other funding methods to raise cash for their day to day expenses.

We at SandS have listed out the areas that you need to focus on when designing an accounts receivable policy for your organisation,

• Credit checks

• Contracts

• Invoicing

• Collections

1. Credit checks

The customer’s credit worthiness needs to be carefully assessed with the help of information obtained through credit rating agencies. This should be combined with in house business judgement based on past experience.

2. Contracts

Determine and document all terms of the customer agreement in writing upfront, before any goods or services are provided. The terms should include the scope of work, payment method and timing and collections (timing, penalties for late payments). The contract could also cover the process to be followed if the customer were to be dissatisfied with the goods or services provided, to avoid this becoming a collections issue.

3. Invoicing

Bill customers timely and accurately, and make sure the invoices get to the right person. With the help of email or accounting software, invoices can be shared electronically which helps save on postage costs and gives customer quicker access to their bills possibly resulting in faster payment.

4. Collections

Establish a collections policy that works for your business and customers and follow it. This should cover how the outstanding amounts would be collected and when to send reminders.

We at SandS are committed to ensuring our clients are able to collect their dues within the credit period given. We review the ageing reports on a weekly basis and based on the client’s collection policy follow up on any long outstanding dues.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Inflation analysis in the Australian market; How will this impact your business?

It’s worthwhile analysing the status of inflation in the economy. It is also important to understand and interpret the impact of inflation to your business (source https://www.abc.net.au/news/2021-05-26 )

This article summarises important areas to consider; with reference to a recent article published on the analysis of inflation in the Australian economy. This analysis mainly covers the price inflation of essential goods, discretionary goods and impact towards residual income.

Inflation rate effect on essential goods and discretionary goods

From 2005 to 2020, the prices of essential goods have inflated with a hike of 61.4%. Major contributor for this being the increased demand for essential goods during the global pandemic. It is also confirmed by research papers that not only the price factor has increased but also the consumption has increased significantly. This has increased the demand for essential goods. Considering discretionary goods during the same period, the increase is 38.6%. Major contributor for the discretionary items price increase is due to tobacco (tobacco is considered as a discretionary good); price increase in other goods excluding tobacco is closer to 18%. This is a significant inflation gap between the essential and discretionary items. Demand for essential goods has been increased as result of the expansion/increase in the following domains in priority order;

– Education

– Health

– Household

How this can be interpreted on its impact to your business

This significant price variance may have a dramatic impact on low-income households. They will cut down expenditure on other basic requirements (cloths, accommodation etc). They will continue to consume essential goods at the prevailing price. However, there will be significant price drop in non-essentials and the goods/services those deemed as luxury items. For your business it is important to maintain a healthy pricing formula. If you are not in the essential goods industry; you need to revisit your pricing strategy and eliminate unnecessary costs and overheads. At the same time, if you are in the essential goods related industry; increasing the price will not be the best decision you should take this moment. You should have a fair understanding of the demand for your specific product and its forecasted demand.

We at SandS currently performing a deep-dive analysis to support some of our existing clients, based on fluctuations in industry. If you wish to know how we can support in growing your business; feel free to contact us.

Written by Nara, ACMA, CGMA (CIMA-UK), MBA (ICFAI University). Nara is a Commercial Accountant at SandS Australia. She has 15 years of experience in business, finance and accounting in senior managerial roles helping analyse, identify, and drive business growth

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.