When an organization needs to enforce internal controls, it’s important to set the right tone at the top, according to CFO.com. How are policies treated at the management, executive and board levels? That can shape the attitudes of everyone in an organization.
How seriously the CEO treats expense reports, for example, sends a message to everyone down the line. One of the most significant challenges for accounts payable management is to enforce corporate travel policies, according to a report by PayStream Advisors. This is where managers often find missed savings opportunities, due to a lack of visibility into spending, and unforeseen risks, like non-compliance with statutory requirements and exposure to expense reimbursement fraud. Without strong internal controls, organizations risk exposure to financial and operating penalties for failing to comply with local, state, national and international tax laws, often very different in scope and reporting requirements.
Implementing an automated expense policy is the starting point for managing this challenge. An expense policy not only sets the stage for potential savings and risk avoidance, but also improves employee morale, because rules now become consistent and evenly applied. Employees know what’s expected, and risks are mitigated.
The best way to ensure these policies are enforceable is to integrate them into expense management software. Here are three ways that these systems can support accounts payable management and encourage cooperation from the entire organization.
- Training and guidance. Integrating policies enables rules to be applied consistently, ensuring that all parties are treated fairly. For example, an employee might receive an alert that suggests alternative travel methods when booking a flight between certain destinations.
- System-initiated auditing. Automated systems can generate audit instructions based on criteria, and they can help with conducting random audits.
- Exception handling. Including approval or handling alternatives can remove frustration and provide a sense of control. Rather than telling traveling employees that they cannot book a flight, give them the choice of getting manager approval.
In the end, effective internal controls can mean the difference between a successful business and one that struggles to compete, CFO.com suggests. Using an automated expense policy and integrating rules into easy-to-use software can help ensure compliance throughout an organization, from employees to executives.
We’d like to learn from your experiences. How much of an impact do you believe C-level behavior has on how well employees comply with expense policies? Please share your thoughts in the comments section!
Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.