(Hat tip to Matteo Paciotti for the photo)
It’s your job to decide the financial policies for your business, but it is impossible to control whether or not your employees stick to the rules. Every employee who places orders or holds a company credit card affects the state of your company’s finances.
With so many people involved, it’s easy for misspending to spin out of control. Never fear. You can extinguish the flames of unruly finances.
Where’s the compliance?
There are a few reasons employees don’t follow financial procedure:
They think the rules are more like guidelines. Not all employees will see the big picture-if 20 sales people exceed their monthly travel budget by one to 200 pounds, the company has potentially spent 4,000 pounds that weren’t accounted for.
They don’t plan ahead. Someone may forget to order one little part and has to pay extra for shipping to get it in on time or doesn’t research the best price before ordering.
They have a legitimate business need. Sometimes, emergencies or special circumstances do arise, but they don’t always clear it with the proper channels or pick the best avenue to solve the problem.
A budget usually accounts for unexpected expenses, but it’s an extra headache to watch poor planning and lack of compliance ruin your budget.
Making finances matter to the masses
To encourage employees to follow your rules, you want to create and implement policies with a few things in mind.
1. Be clear on expectations.
Knowing expectations is a cornerstone to employee happiness, but it can also help employees follow financial guidelines too. Have a written policy and be ready to give feedback on what the policies mean.
2. Have a little transparency.
You don’t have to provide a play-by-play of the company finances, but the how and why of a policy is more important to employees than you think.
3. Explain the big picture.
Let your employees know the goals of the company. Tell them how mishandled finances will directly affect those goals, their own work and the work of their colleagues.
4. Be consistent.
To follow policy, employees need to respect the policies you implement. It’s important that approvals and denials are consistent. Otherwise, everyone will assume they are the exception.
5. Be flexible.
You can’t predict everything. While your policies need to be clear and consistent, you do need to be able to handle the unexpected. An ‘open door’ policy to discuss expenses with managers will encourage employees to come forward with concerns.
6. Give your employees accountability.
Monitor spending and purchasing as it happens. Accountability creates awareness in employees about what spending is necessary and what expenses aren’t. Have your managers help you by reviewing purchases and spending to catch bad practices before they spin out of control.
7. Automate expense reporting and purchasing
It can seem daunting to monitor numerous employees at different locations. Automate expenses and purchasing in the cloud. You can review requests, spending and records to make sure everyone in your company stays on track.
Extinguish the flames
If you take your expenses and purchasing to the cloud, employees can report expenses with ease. Purchase orders can be approved in seconds. The easier the process, the easier it is to get employees to comply.
Maintaining control of your company’s finances is your top priority. Encourage your employees to fight the fire with you instead of lighting the match.