How To Reduce Employee Expense Claims

May 30, 2020

When economic times are tough, businesses need to plan carefully to increase their income and reduce their outgoings; looking for effective solutions that will make a real contribution to the bottom line is essential. One area that is frequently overlooked is claims for expenses by employees, and without effective control these can add a very large burden to company expenditure.

There are some simple rules that all businesses should follow or implement so that money on expenses can be saved, but in a fair and transparent way so that employees can be confident they are being treated and reimbursed properly.

Employee Savings and Expenses

Put an expenses policy in place

Many small businesses in particular do not have an expert on pay and expenses in-house, and consequently may be unaware of some of the legitimate expenses that employees can claim. They may also be unsure as to what the tax office deems as illegitimate items, so taking some time to put together an expenses policy that is clear and unambiguous will help both employees and human resources managers to get it right.

Train the managers

Anyone who has to deal with and pass employee expense claims should be trained to understand what is and is not allowable. A YouGov survey in 2010 showed that over 75% of employees stated their employer had never rejected or questioned an expenses claim. Trained managers are much more likely to spot either a fraudulent claim or one where expenses items claimed cannot be justified under company policy. Putting the right support mechanisms in place will help to control the expenses bill.

Pay expense claims promptly

Disaffected employees who have to wait a long time for their expense claim to be paid are more likely to try to add things into their expenses or inflate a claim. Fiddling expenses can sometimes appear to be justified if employees are very unhappy, despite the fact it is a crime, so having an efficient system of policies, checks and balances to speed things up will make for a more contented workforce.

Look for ways to streamline systems

Dealing with expense claims can be time-consuming.  It is an administrative task essential for running a business but it does take employees’ time away from other business functions that make money. If staff input makes a significant saving then it is probably worthwhile, but there are now software management tools that can assist with the job. These types of solutions can be implemented with cloud technology, making significant time and cost savings.

Employing contractors

Contractors also need to be fully aware of company policy in relation to expense claims. If the company is employing contractors directly, their claims will have to go through the system, but many contractors or freelance workers choose to use an umbrella company to employ them and process their tax, NIC and expenses information. The advantage of using a firm like is that the employer draws up an agreement with that company in relation to what a contractor can and cannot claim for, and the umbrella company will deal with all the paperwork. This takes another burden off the administration side of a business.

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