Especially if there is no budget floor or ceiling? How do you keep employees, consultants, and potential executive candidates from taking advantage of the company by traveling as they please and getting large expense reimbursements?
How can a CEO of a small early stage company control travel expenses?
Answers
My thoughts....
1. They only get away with it if you reimburse them. The "control" is still with you or who ever is writing the checks. Refuse to pay those that you think is excessive. As the cliche' goes, you can be taken advantaged of only if you allow them,
2. It is never too early for a travel/expense policy....even if it is general in nature. Write down how you want the t&e policy to look like (or go with a template version). Then disseminate the information.
I read a "conceptual type policy" that is being used by a Silicon Valley startup (I forget which company), maybe you can go that route. In essence, their Travel and expense policy states that employees should be good stewards of the company's assets and should use discretion in spending.
3. "potential executive candidate" abusing reimbursements (assuming they know the policy or discussed with them) is a red flag.
As a P.S., have you read the article about Charles Schwab's CEO taking candidates to breakfast and telling the servers to intentionally mess up the order to see their reaction? Well, you can turn this to a positive and turn it into some kind of "character test". Wouldn't it be nice for a Chair to see how a potential executive tact if he leaves his "wallet" on the table (open reimbursement)? Better to be out with a first class flight or a presidential suite than hire the candidate and get 3 or 4 years of extravagant spending.....and god forbid malfeasance.
Message me or let me know if I could be of further help. Good luck.
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I agree with most of the other comments (either partially or fully). Look at the problem from this point:
If you have problems controlling T & E, what else will you have trouble controlling. In addition, having run-a-way T & E expenses is a sure-fire way to inculcate sloppy work ethics and low productivity.
By the way, Proformative has a recent
https://www.proformative.com/whitepapers/rules-based-expense-reporting
You are the CEO!!!! Lay down the law!!!!!
Do you have a travel & entertainment reimbursement policy? That is the first step.
Second, if you are the CEO, you have the power to tell people what will be reimbursed and what won't and set the ceiling.
Where is your
So here is the first step.... Call a meeting and tell people all T&E expense must be pre-approved by you or the CFO. No exceptions. If they spend money without approval, they won't be reimbursed... period.... end of story.
Second, have your CFO write a very tight policy on what will and what won't be reimbursed. Then follow the policy strictly.
Set budgeted monthly amounts for each person. Any amounts in excess of those budgeted amounts will not be paid. No carry over from month to month either. Make them justify every months budget request.
Hire an experienced travel agency and require all travel be booked throught them. (I personally like American Express) A quality travel agency will enforce your travel restrictions and keep track of unused tickets. A travel agency will pay for itself with the discounts they get as well as tracking unused tickets. Many also have deals with the airlines for low or no rebooking fees. Make sure you give the TA authority to say "no" to those people wishing to get around the policy.
Use the GSA reimbursement rates as the maximum that will be reimbursed.
Require all expenses be backed up by documentation. No receipt, no reimbursement.
Finally, tell each person, face to face, to spend the company's money as they would spend their own, and that you and the CFO will be reviewing their expense reports. All it will take is for you to fire someone for abusing the policy, and the message will be sent.
I am going to tell you the straight truth. You have let this get out of control. It will take a lot of work to get it back under control because the horses are running wild right now. But you can do it. But you will have to be tough as nails.
These are some solid responses with a lot of good ideas. I like to make T&E simple and to put the responsibility on the employees. First of all a simple and clear police about what is reimbursable is in order but I don't recommend an extensive list of rules and "do's or don'ts", they just don't work for people who want to find ways around them and they are annoying for good, honest people who want to do the right thing. Second, employ
If an employee does not comply with the company's policy, I make sure that they are informed of the problem, any money "due the company" is collected and that they are re-trained on the company's policy. If they fail to comply a second time, their corporate card privileges are terminated and they must thereafter use a personal card for all business expenses. They can still use the company's technology platform to request reimbursement but if their expenses are not approved, they won't get the money and the bill is their problem.
BTW, if there is dishonesty involved, I have a "one strike policy". As soon we find dishonesty and verify it, the employee is terminated - regardless of their position.
I recently heard of a very innovative approach at a tech company, though I cannot recall it's name. The travel policy was minimal, just a few broad stewardship principles.
The firm instead used peer pressure rather than extensive policies to control costs by posting everyone's expense reports for all to see! If someone closed a major deal and treated themselves to an expensive dinner and fancy wine, no one would begrudge them that celebration... but outside of successes worthy of such luxuries, they would have to answer to their friends for unusually expensive airline, hotel, and meal costs.
The CFO and supervisor didn't have to play the heavy -- the entire team kept itself in check. This wouldn't work everywhere, but I'd be curious to experience it firsthand or hear from others who have lived it.
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It could have the reverse effect - Jane is spending $100, Joe $150 and Spot $400.
Spot is outlier, but so am I at $50 - I should spend more...
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