The Path to “Just Right” Spend Controls

By The Center Team on December 5, 2019

The best corporate spend controls strike that just-right balance that both empowers employees and helps finance teams operate more effectively.

Figuring out the right approach to spend controls can feel like a forest of uncertainties. Some companies go the laissez-faire route and wander on and off their policy path at a whim (if they have a clear path at all). Others take more of a control freak approach with strict pre-approval requirements, mountains of paperwork, and checkpoints along the way—to the point of inhibiting productivity and downright annoying employees.

Effective spend controls should help employees understand expectations and move forward with a sense of clarity, trust, and support. You’re not looking to create rigid roadblocks or immovable obstacles, but rather a helpful guide that can morph as your company evolves and grows. Having the right level of controls in place increases transparency and accountability, creating a more productive, efficient, and positive environment.

One Approach to Avoid

Many companies believe they stay in control by asking employees to use their personal credit cards and then get reimbursed for those charges. The thinking is that when employees are on the hook for reimbursement, they’ll be more careful about their spending. The trade-off is the loss of visibility, however. Budgeting gets more difficult, and businesses end up losing control of employee spending, since expenses are only revealed after the fact.

“It’s hard to get money back if something is spent that shouldn’t have been.”   |  CFO of a 1,000-person global testing and certification company

Personal card usage also means reimbursement, which can be problematic for your employees. What if they have to wait several weeks to be reimbursed and they really need the money now? What if they’re accruing interest on that corporate charge, which could affect their personal credit score? What if your requirement that they use their own cards breeds resentment and ill will among your staff?

The good news is that you don’t have to finance business spending with employees’ personal card usage to have spend controls that work.

Too Hard or Too Soft?

To take a page from Goldilocks, would you say your spend controls are too hard, too soft, or “just right”?

If they’re too hard or overbearing, you might find yourself:

  • Spending too much time waiting for expense reports to be turned in, reconciling multiple card statements, or filing and reversing accruals every month
  • Manually auditing expense reports to ensure compliance
  • Continually clarifying different aspects of your expense policy
  • Struggling with employee engagement or even retention issues
  • Not being able to act quickly enough to capitalize on opportunities that arise

If they’re too soft or wishy-washy, you might end up:

  • Coming to terms with wasteful spending or policy violations after the fact
  • Giving expense reports only a cursory audit, or skipping it altogether
  • Reviewing (and approving) increasingly questionable expenses
  • Dealing with the fallout from managers not enforcing policy consistently
  • Regularly going over budget or missing revenue targets

If you empower your employees to make purchases with the right controls in place, you decrease the time needed to process expenses and increase opportunity to learn from them. Not only will you know who’s eating the porridge and how much, you’ll know how much to realistically plan for going forward. Ultimately, you’ll have a stronger fiscal culture rooted in trust, empathy, and empowerment instead of confusion, fear, and control.

“If you empower employees to make decisions, then you don’t have to make as many decisions yourself, and better decisions will be made.”  |  CEO of a 20-person smart lighting startup

Getting it “Just Right” with Center

In order to find that “just right” path between employee empowerment and financial accountability, it’s important to consolidate your spending into one card program like CenterCard®. The key is having the right level of built-in spend controls to dynamically (and easily!) determine who can spend, how much, and when. The tools are customized to your policy to help guide and correct spending behavior at the right time, and quickly communicate updates as they happen. The payoff is visibility—you can monitor expenses as they happen, track actuals, and view complete, accurate data in real time.

“At a certain point, we needed a corporate card program. We needed better visibility into spend. We needed to close the books at the end of month and didn’t want to wait three months for someone to file an expense report.”  |  CFO of an 800-person IT software company

A “just right” spend control system like CenterCard empowers your employees to conduct their necessary company business while giving your finance team the visibility and insight they need to succeed as well. Learn more about how Center can help your finance team achieve more.