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Three Expense Policies You Should Consider Revisiting

Three Expense Policies You Should Consider Revisiting

“Are you reallygoing to reject that expense report because of that?” We ask our customers this question all the time — and guess what, they usually say “Nope.” They’re just adhering to their company’s travel and expense (T&E) policy without really considering the context of the expense. Many T&E policies we’ve seen are outdated. More often than not, these policies were either put in place when the company only had a handful of employees traveling or they were based on industry standards that haven’t been revised in over a decade. With business travel on the rise, it isn’t just the overall reimbursement amount that has increased, but also an increased burden on employers to audit these expenses.

From our experience implementing our AI-powered expense audit solution for over 1,000 companies, we’ve identified three expense policies your company should seriously consider revisiting.

‍Don’t be too strict on meal spend

$10 limit for breakfast, $15 for lunch, and $25 for dinner – this is the standard policy most companies have around meal expenses, but how often do auditors truly follow this? It’s becoming increasingly common for auditors to approve expense reports that don’t stick to these strict guidelines, as long as employees don’t go over the overall daily limit of say, $100. We recommend setting an overall daily meal limit or per diem rather than a meal-based one. This change will ensure that your auditors are paying attention to the expense reports of employees whose behavior they actually want to address, rather than focusing on someone who spent $5 extra on lunch, for example.  

Give your employees more time

T&E policies usually require expenses to be submitted for reimbursement within 90 days of incurring the expense. Let’s say an employee submits a receipt that’s older than 90 days. It’s likely that this expense just slipped the employee’s mind or they just found it while cleaning out their suitcase. Are your auditors really going to go through the trouble of asking the employee why they didn’t submit the receipt earlier? Probably not. There are various reasons for delayed submission, but usually, the employee is given the benefit of the doubt. We recommend increasing the permitted expense age to 180 days to give employees more time to submit their expense reports and decrease any potential back-and-forth between employees and auditors.

‍It’s okay to enjoy a glass of wine once in a while

Sure, no one wants their employees getting drunk on the company dime, but it isn’t uncommon for employees to sip a glass of wine at dinner – especially when they are traveling on business, away from their families, and eating all by themselves in the hotel lobby. Okay, I didn’t mean to paint such a dampening picture, but it’s quite true! Expecting companies to pay for a drink used to be a complete no-no in the business world, but today, companies are more flexible about alcohol. So, either allow it up to a certain dollar amount, say $100, or track an employee’s behavioral trends over time without interrupting the reimbursement process.

Those are just a few of the ways you can change your expense policy to help reduce the stress on both your auditors and your employees. For more ideas on how to best structure a T&E policy that promotes a healthy expense culture, download our whitepaper.

Cauvery Mallangada is an Implementations Manager at AppZen, the world’s leading solution for automated expense report audits that leverages artificial intelligence to audit 100% of expense reports, invoices and contacts in seconds.

AND THE ENVELOPES, PLEASE

What do a U.S. manufacturer, a Swedish retailer and a South African pharmacy chain all share in common? Hillenbrand (U.S.), ICA Group (Sweden) and Dischem Pharmacies (South Africa) battled it out with four other global firms recently at the 2018 Supply Chain Finance Awards.

Held Nov. 29 in Amsterdam, sponsored by global financial institution ING and organized by the Supply Chain Finance (SCF) Community, a global entity of professionals, private firms and knowledge institutions, their annual awards not only recognize achievements in the larger SCF world but also promote greater unity and collaboration as it grows and matures.

With industrial value chains becoming increasingly complex, manufacturers in 2018 relied heavily on interlocking supplier networks. More actors equate to increased risk, principally because parties do not know one another, and many times they are working across time zones and borders where physical relationships are nearly impossible to foster. Through shared new research and best practices, the SCF Community is helping to reduce complexity and risk and keeping cash liquid, something that benefits both sides of a transaction.

A typical contract is comprised of a buyer and a supplier. Each have distinct interests but both desire at least one thing in common: optimized cash flow. This produces a natural conflict as the buyer seeks to delay payment (to retain their cash) and the seller needs to release the product and invoice the buyer to receive payment as quickly as possible. With SCF, there is a third actor added to the mix–the funder or financing institution–which buys receivables or invoices at a discount from suppliers. The suppliers get their cash quickly and the bank then deals directly with the buyer.

The SCF process encourages collaboration instead of fomenting competition, which is a natural extension of a relationship where both parties desire the same, individually advantageous outcome. And SCF works even better when the buyer possesses a superior credit rating to the seller. A savvy buyer will use this to negotiate better terms from the seller, but the seller can also capitalize immediately by selling its receivables to the financing institution for immediate payment.

 

SCF at a Glance

It is useful to understand the SCF concept at a macro level because it does a lot of things but not everything. As such:

1. Not a loan – For the supplier, a true sale of its receivables is on the books, so supplier finance is simply an extension of the buyer’s accounts payable. Thus, the process is not considered a financial debt.

2. Multibank capacity – More than one financial institution can take part in the process, which adds a tremendous amount of flexibility.

3. Not factoring – In most circumstances, the supplier receives payment on the invoice (minus a standard transaction fee). Once the invoice is settled, there is no recourse burden on the supplier.

4. Equal opportunity – The beauty with SCF is it provides value not just for large companies but firms of all sizes (and credit ratings). This also includes SME suppliers.

 

The Awards

The 2018 Supply Chain Finance Awards jury, composed of the leading minds from the Fraunhofer Institute, the Luxottica Group, Nestrade S.A. and Metso, had its hands full this year. On the Transport & Logistics side, Kuehne + Nagel Group took home the award for Best SCF Solution. The Swiss-based holding with 1,336 offices worldwide and more than 75,000 employees had bested DHL Global Forwarding, Panalpina and DB Schenker in accounting for roughly 15 percent of the word’s sea and air freight business revenue.

This year, Logistics Kuehne + Nagel added an SCF layer on an already efficient Tradeshift e-invoicing platform, which now provides an unparalleled amount of transparency with regards to invoice status as well as all relevant SCF information. For small and medium-sized suppliers, early payment options are critical, and the Kuehne + Nagel solution gives them the ability to create invoices quickly online, which can result in payment within a matter of days.

The cash-conversion cycle lies at the heart of the matter with, again, both buyer and seller seeking to either maintain liquidity or add liquidity as soon as possible. The jury recognized Kuehne + Nagel’s ability to not only improve on this cycle but also advance the relationship between buyer and supplier, a natural win-win and one that the SFC Community seeks to foster. Kuehne + Nagel works with Citi to offer early payment options to more than 16 North American and European countries, spanning eight currencies. Asian and the Middle East are next for 2019.

Speed is crucial, and this is an area where Kuehne + Nagel set itself apart, having been recognized in the 2017 Adam Smith Awards in the category “Best Trade/Supply Chain Finance Solution.”

To stay abreast on news surrounding the 2019 awards, visit the regularly updated SCF Forum website: www.scf-forum.com/venue.html.

The Most Tax Friendly Country? Canada, Says Report

Ontario, Canada – Canada remains the world’s most tax friendly country for global business, according to KPMG’s Competitive Alternatives 2014: Focus on Tax report.

Canada’s top international ranking, the international business consultancy said, “is mainly due to low effective corporate income tax policy combined with moderate statutory labor costs, as well as the country’s system of harmonized sales taxes.”

The United Kingdom ranked in second spot with Mexico landing in third in terms of tax competitiveness. The study also revealed there is no standard approach in setting tax policy among the countries analyzed.

Although the types of taxes used to raise government revenues are more or less similar among countries, it found that “there is a large range in how these taxes are weighted and applied.”

Some countries, it said, “have a tax policy focused on delivering a low corporate income tax rate in order to compete for more businesses. Those countries may need to rely more heavily on other taxes, such as sales or payroll taxes, to derive their tax revenues.”

Similarly, other countries “use their tax policies to attract certain types of businesses with targeted incentives for activities such as manufacturing or research and development.”

The countries were scored based on their TTI, or Total Tax Index, with the US, which ranked fifth on the list, providing the benchmark at 100.0.

For example, an overall TTI number of 51.6 means total tax costs are 48.4 percent lower in that country than in the US.

Spotlighted countries given as examples were Canada (53.6 percent); the UK (66.6 percent); Mexico (70.2 percent); The Netherlands (74.5 percent); the US ( —); Australia (112.9 percent); Germany (116.3 percent); Japan (118.6 percent); Italy (135.8 percent); and France (163.3 percent).

 

06/26/2014