Each year companies lose about 5% of revenue to fraud. This totals to about $3.5 trillion globally. One area that contributes to this loss is fraudulent expense claims. Not only does this add to company loss, but it can put your business at risk with the IRS.
Implementing an expense management software and starting to track per diem expenses, budgets, and company credit card expenditures are one way to prevent such fraud.
In this article, we talk about one of the most common reimbursements - per diems expenses. Here we discuss the nuances of per diem expenses and how a business can effectively manage them. Let's dive in!
How to manage per diem expenses effectively?
There are two methods for how your business can determine per diem rates. You could use the GSA calculator that dictates rates by city and state. The other option is the high-low substantiation method.
Additionally, here are some pointers to keep in mind while determining your per diem rates:
- Federal compliance: Last October, the IRS announced the new per-diem rates. If you use an expense management software, the update would have automatically gotten incorporated. Thus, you can continue business operations free of interruption.
- Receipt and payment management: While you don't have to provide the maximum allowable limit, you don't want to go over it as well. You need to ensure you document all necessary information to ensure compliance with federal laws. Without this, you could risk changing your tax liabilities.
- Reporting and analytics: It isn't enough to simply record everything. Your management software needs to be able to aggregate information in a meaningful way as well. This allows you to analyze the data and compare them to set budgets. This includes everything from petty cash management, to corporate credit card reconciliation, and travel expense management.
How can you make reporting per diem expenses easier for employees?
The best method of reporting for your employees is one that is user-friendly and quick. Choose an expense management solution that requires minimal effort, such as an in-built receipt scanner app. This will ensure employee compliance and participation.
- Workflow automation: Look for features that let you customize and automate workflow and pre-spend approvals. This will ensure employees don't receive conflicting communication. Employees are known to spend 80% of the working day on tasks with little value. Automation of expense tracking can reduce this percentage for your employees.
- Departmental integration: Full integration into an existing software ensures that all departments remain aware of expenditures. This will improve communication between traveling employees and employees in the finance department.
- Streamlined tracking: A comprehensive tracking system will do more than just scan receipts. If employees get reimbursed for the mileage they drive, Google Maps integration will turn a tedious task into one that takes a few simple clicks.
- Google integration doesn't stop at Maps; the entire suite of Google products can integrate for seamless expense reporting.
- Integration with WhatsApp makes on-the-go expense tracking a breeze.
How can Fyle effectively manage per diem expenses?
By implementing a feature-rich expense management software like Fyle, you can ensure your company effectively manages per diem expenses and more. Check out our features that assist with expense tracking, reporting, automation, card reconciliation, auditing, and software integration.
By creating a centralized system, you can streamline per diem approval and management. This will allow your employees to spend less time entering data and more time focused on other tasks.