How to manage corporate expenses in crypto
Learn how to manage your company's expenses in crypto by setting clear policies, automating where possible, and reviewing expenses to avoid inaccurate or fraudulent claims.
FTX made headlines last year with its sudden collapse. Court testimony highlighted the lack of internal controls within the company, ultimately contributing to its downfall.
Former employees and court filings revealed that FTX’s spending went unchecked, with millions of dollars expensed on lavish travel, sports sponsorships, and even luxury homes - many of which were approved via emojis on Slack.
It’s a cautionary tale in accountability, and the importance of having proper expense management systems in place.
But managing employee expenses can be a hassle, especially when claims have to be processed manually. When relying on manual expense management, reimbursing expenses can be subject to delays and errors.
Especially for global Web3 teams like DAOs, reimbursing expenses like conference tickets in stablecoins can be an additional challenge as almost no expense apps today support crypto payouts.
In fact, the average expense claim takes a whopping 20 minutes to process when done manually. When you have multiple claims to deal with every month, this can add up to a significant amount of time and effort for your business. That's time and energy that could be better spent on more valuable tasks.
The chances of errors in manual expense management are also high. In the UK, 1 in 10 employees submit expenses containing errors regularly. These errors can lead to incorrect reimbursements, wasted time and resources, and even fraud.
There’s good news, though. With the right practices in place, businesses can overcome these challenges, and streamline their expense management process.
In this article, we’ll explore some of the best practices for managing employee expense reimbursements to ensure the accuracy of expense submissions.
Best practices for managing employee expense reimbursements
1. Create an expense policy to set clear expectations
One of the most effective ways to do that is by implementing an expense policy that establishes clear expectations for your employees. Your expense policy should include guidelines for what expenses are eligible, how they should be submitted, and what the reimbursement process looks like.
To start, establish rules and requirements, including limits for different categories, per diems, and receipt requirements. Clear communication about what can and cannot be submitted is vital to avoid confusion.
Expectations for submissions and reimbursements should also be clearly defined, including the process for submitting expenses and how employees should expect to receive reimbursements. Additionally, it's essential to provide FAQs for employees to follow if they have any questions or concerns. To help you establish your expense policy, you can find various templates that can serve as a useful starting point.
The rule for claiming reimbursement is simple: purchases must be necessary for running your business. While expenses such as meals and travel costs can qualify as business expenses, they must be incurred during essential work-related travel, and not for recreational activities.
Keeping receipts is crucial for claiming tax relief in most countries. To ensure that expenses are valid and eligible for reimbursement, the IRS requires supporting documents. Your supporting documents should contain essential information such as the name of the recipient, payment amount, proof of payment, date of expense, and a description of the purchased item or service. This information must demonstrate that the expense was incurred for business purposes.
As such, your reimbursement process should require employees to submit receipts for business trips and other expenses. Furthermore, receipts allow companies to verify the legitimacy of all claimed expenses.
Ready to Supercharge Your Crypto Accounting?
Stop wasting time, manually creating journal entries. Automate your accounting now, and enjoy error-free reporting
Learn how to scale your company's crypto & fiat financial operations
Your financial complexities are our specialties. Schedule your free consultation today and discover how Request Finance can transform your financial operations
Simplify crypto and fiat financial operations today
Rely on a secure, hassle-free process to manage your crypto invoices, expenses, payroll & accounting.
2. Review expenses to avoid inaccurate or fraudulent expenses
Expense fraud is a serious concern for businesses of all sizes.
It’s estimated that companies worldwide lose around 5% of their revenues due to fraud, and expense fraud alone is responsible for 14.5% of all detected fraud. In the US alone, fraudulent expenses result in an astounding annual loss of over $2.8 billion that’s committed by over 1.1 million individuals.
When it comes to work-related expenses, it’s important to make sure that employees aren’t using company funds to pay for personal items.
Typically, when an employee submits an expense, it goes through an approval workflow before being approved and processed for reimbursement. This workflow can vary depending on the company’s policies and procedures, but generally involves multiple levels of approval.
For instance, an employee's direct supervisor is responsible for reviewing and approving their expense report before it goes to the finance team. The finance team then checks the report for accuracy and compliance with company policies and procedures, and approves it for reimbursement processing.
Regular review and auditing of expense reports is crucial in detecting and preventing potential fraud. This involves going through each expense report to check for any red flags, such as duplicate expenses, unapproved expenses, and unusual patterns of spending.
However, giving login credentials of the company account to other team members or external parties posed a problem for CFOs in terms of security. Certain team members such as HR managers, should not have access to change corporate information or crypto wallet addresses, and teams may not want to share login information with external accountants.
With tools like Request Finance, you can collaborate more efficiently with your team to manage expense approvals without compromising security. It will allow you to add team members with different roles and permissions so that you can optimize the expense workflows based on the responsibilities of each team member, allowing them to focus on what they need to do most.
3. Automate where possible
On average, a company spends approximately $500,000 on processing expense reports, with an estimated 3,000 hours spent correcting errors in the reports annually. The different phases involved in managing and tracking business expenses present numerous opportunities for mistakes or delays.
The smallest errors in expense management can quickly add up, which can impact your profits significantly. The time spent by employees filling out spreadsheets and keeping track of receipts can take away valuable time that could be spent on more important tasks.
Automation is key to ensuring accuracy and efficiency. By centralizing all aspects of expense management, from receipt capture to approval, companies can significantly reduce the time spent checking for errors and inaccuracies.
While there are several expense management tools available in traditional finance, none of them support crypto expenses. If you’re a web3 team that incur corporate expenses in both fiat and crypto, the Request Finance app allows finance teams to review, approve, and make mass payouts for expense reimbursement.
With the Request Finance expenses mobile app, employees can easily submit their expense claims by uploading receipts and relevant details.
The app also allows employers to view and approve expense claims in real-time, and the ability to make payments in a single batch transaction - all from a single dashboard.
Concluding thoughts
By embracing automation and streamlining expense management processes, businesses can reduce errors, save time and money, and make informed decisions about budgeting and resource allocation.
In today’s rapidly changing world, staying ahead requires adopting innovative solutions, and automating expense management is a step in the right direction.
Crypto finance tips straight to your inbox
We'll email you once a week with quality resources to help you manage crypto and fiat operations
Trending articles
Get up to date with the most read publications of the month.
%20(1).png)
Our latest articles
News, guides, tips and more content to help you handle your crypto finances.
Master your crypto spend management now
Take control of your crypto spend management while relying on our safe and secure process.
