Do you have a budget bandit in your team?
What is a ‘budget bandit’?
Have you ever had a manager impulsively ‘shout’ Friday-night drinks for their team and then try to expense it back to the business? Or an office manager buy flowers for the reception area without first checking there is a budget for it? Neither employee is trying to be malicious, but they are still detrimental to your expense management.
Daniel Kniaz, DiviPay’s CEO recently joined Paul Jansz on his podcast, Talking Numbers to discuss how DiviPay helps protect businesses from expense management pitfalls!*
The over spender
As a CFO or business owner, you’re no doubt well aware that other employees might not be as cautious about spending as you and your finance team are. A common frustration is when a team is allocated budget for the quarter, half year or year, but routinely go over their allocation. It could be the marketing team over subscribing to marketing technology, or the HR team overspending on social events for the organisation... no matter what it is, it’s an expense that shouldn’t have been incurred.
To outsmart a budget bandit, finance needs to be on the front foot with how much money is going out the door. The best way to achieve this is to flip how finance manages expenses on its head. You don’t want employees to be spending money and then asking for reimbursements – you want a virtual business card, with restrictions on where those funds can be spent.
The careless spender
Just as some people will overspend, others might instead spend budget on the wrong thing. They may have been allocated a certain amount for stationery, for example, only for finance to discover the funds have instead been spent on morning tea supplies, leaving the office without any paper for the printer! Or a budget allocated to travel costs might get diverted to a team lunch. There’s not much finance can do after the fact if money has been spent on the wrong thing.
The ‘careless spender’ is best reined in with a strong expense management tool, that restricts how much they can spend and on what. DiviPay makes this easy for finance managers or business owners – they simply give employees a set amount to spend on a business card (it’s pre-set so they can’t go over budget) with expense categories the employee can allocate spending to, so there is no more careless spending.
The exuberant spender
Another employee in the budget bandit posse is the person who offers to use the company card at every opportunity, regardless if it’s for their team or their allocated budget. This employee is all too often a senior exec or manager, making it particularly difficult for finance or business owners to curtail their business spending habits.
The best way to manage a budget bandit is to get them to:
- Agree on their budget before the spending starts – it’s no good allocating a budget that they never intend to stick to.
- Support an expense management tool, with both parties understanding why it’s great for the business.
- Embrace a virtual business card, essentially removing the bandit's ‘blank cheque’, making them accountable for how much they spend and what they spend it on.
You can hear more great ideas from Daniel’s podcast at the link below.
* Listen to Your Customers by TALKING NUMBERS with Paul Jansz (anchor.fm)