How to foster a culture of responsible spending for business growth

Minimizing increases in operational costs is key for any growth-oriented business. Building a strong foundation of systems, processes and policies is critical for any scalable growth. As part of the foundational work, establishing a culture of responsible spending should be a component of your organization’s business plan.

A well-executed corporate credit card program can help you create that culture. Implementing a card program, along with the following best practices, can help curtail unnecessary or excessive expenses, while decreasing the risk of possible expense report fraud.

Create a control strategy for your program.

By creating a control strategy for your corporate credit card program, you can minimize noncompliant behavior and decrease the time and effort that’s needed to enforce adherence with organizational policies. Your strategy should not only cover organizational policies but also transaction monitoring, technology integration, audit procedures, reporting and analytics and cardholder training. In addition, this approach should balance ease of use for employees with strong controls for financial leaders. Once implemented, make sure to review your card program reports – especially audit, compliance and decline reports – on a regular basis. The reports can help you identify areas for improvement and controls that may need updating.

Create a well-defined and communicated expense management policy.

Your employees will likely make responsible expense decisions if they understand the budgets, limitations and reasons your expense management policy is in place. Make sure your policy is clear and easy to understand for all employees and communicate it broadly. Best-in-class companies regularly communicate their expense policies to employees and the impact adherence has on the organization.

Help your employees connect expense guidelines to positive business outcomes.

Spending guidelines are less likely to be followed if they are perceived as arbitrary. Tactically, providing guidelines that clearly outline what’s considered a reasonable expense is an essential first step. Be as specific as you can about the types of allowable expenses and maximum spending levels.

Mandate payment with company-issued corporate credit cards.

Requiring that your employees pay with their company-issued corporate credit cards whenever possible gives you more control over spending. Corporate credit card programs allow you to set spending parameters based on an individuals’ job duties and budgets.

For example, a maintenance manager might only be able to use their card with a certain category of merchants or a sales representative might only be able to use their card for travel and expenses (T&E).

Use virtual cards for cardless employees.

Adding virtual cards to your corporate credit card program can help you gain even more control over your organization’s spend. Cardless employees – employees who don’t have a corporate credit card – create manual expense management challenges that virtual cards can solve.

Issuing virtual credit cards to cardless employees allows for greater insight and control over spend. It also extends the value of your corporate credit card program by creating greater rebate potential.

Empower your employees to make financial decisions.

Trust has a profound impact on employee performance. If your employees are trusted with financial responsibility and allowed to make decisions, they are more apt to make sound financial choices. Research has shown they’ll actively look for deals — less expensive hotel rooms, smarter rides to the airport and cheaper flights.

Spending limits and guidelines don’t translate to restriction — they simply enable workers to make smart decisions within parameters they can respect.

Use your card program data to your advantage.

One of the biggest benefits of using corporate credit cards is the wealth of detailed, transactional data they provide. Make the most of your program by proactively and frequently reviewing how your organization’s funds are actually being used.

Developing reports that look at expense categories can help identify budgets that may exceed plan. Analyzing the transactional data can also reveal spending trends and identify opportunities to negotiate better terms with vendors, driving savings to your organization's bottom line.

Expense fraud is a significant challenge for many organizations. Reviewing your card program data can help you gauge adherence to your policies and procedures. It can also help identify possible patterns of card misuse including unusual merchant categories or purchases at odd times.

In addition to mandating corporate credit card use, it’s also a good idea to audit a random sample of employee expense reports for policy adherence on a regular basis.

Institute a review and approval process for all expense reports.

Everyone’s expense reports should be reviewed and approved before processing. A review process helps ensure that expenses are business-related and that your employees comply with your expense reporting policies and procedures. Employees who know that their expense reports will be reviewed are more apt to be careful with their spend.

For middle market organizations, your accounts payable department may handle review, approval and processing for all expense reports. But as your organization grows, consider having an employee’s manager review and approve their expense reports. Even the CEO or company founder should have their expenses reviewed by the appropriate colleague on the senior management team.

Better decisions help lead to future growth

It may be challenging for a growing company with an entrepreneurial mindset to implement these best practices. However, leaders who implement them as part of their corporate credit card program make it easy for employees to understand what’s expected and make good decisions.

In turn, this leads to better decisions regarding expenses and fosters a culture of responsible spending that helps enable future growth.