How finance teams can strike the right balance between trust and control
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Employees want to feel trusted, and finance teams want to retain control over spending.
Although adapting to changing processes can be a barrier for finance teams who might prefer to stick with what they know, taking the step towards trusting your employees can lead to positive change.
No one wants to be micromanaged, but over-trusting your team can sometimes lead to trouble. Trust is a spectrum, so finding the optimal balance starts with open communication, clear expense policies and healthy spend controls.
Trust and control was a common theme across our recent Beyond event in London, ( catch up on-demand!), so we’ve pulled together the best tips to help your business navigate it.
(Em)power to the people
80% of employees feel more motivated to work when they have higher levels of trust from their employers. The proof is in the pudding when it comes to investing in trust and transparency – it can have a seriously positive impact on the company as a whole.
Companies with greater levels of trust are also more profitable with higher stock market return. So it’s in your best interest to make your people feel empowered.
In fact, empowering employees to spend autonomously offers several advantages, and not just for your business. When employees have more trust in their organisations, not only does productivity improve, but they stay with their employers longer and even collaborate more energetically with their colleagues. Happier employees are less stressed employees, which nourishes performance.
Trusting employees to spend autonomously might not come naturally, but it’s all about making the first move. By allowing your employees to manage their expenses, you might find that they spend even less than when these expenses are managed for them. Maybe it’s the responsibility of being in charge of their spending, or being held accountable for what they’re spending, that makes life easier for both finance and employees.
Control is simply good housekeeping
Control is a job to be done, not a bad thing. It’s part of finance’s job description. And according to Johnny Bray, CFO of Vistair and speaker at our Beyond event, “Finance has a lot of catching up to do to do things more efficiently.” Manual processes, Excel spreadsheets, missing receipts – modernising these tedious tasks has become a necessity for finance teams in maintaining control over the books.
The secret ingredient to better control
It may seem simple, but sharing information openly with the right system to manage it is the key. Promoting an environment of collaboration and teamwork can improve communication organisation-wide.
The problem is, sometimes employees aren’t completely clear on what the rules around spend are, so finance teams are seen as the bad guys. Since they control the budgets, it's up to them what people get to spend. No one enjoys being chased down for receipts at month-end or rectifying an expense after it’s happened, so finance can be bogged down with a bad (and sometimes unfair) reputation.
In fact, only 40% of employees are fully aware of the company’s goals and strategies. Chronic stress in employees often comes from being unaware of the company’s direction, which ultimately undermines teamwork.
After all, inconsistencies in financial reporting lead to a loss of control business-wide, and confusion over what can be spent makes it difficult for employees to be consistent. People not being up to date with the guidelines set can easily lead to overspending, running over budgets and loss of financial control.
So the key ingredient? Transparency. Having clearly communicated policies is a reliable way of regaining control and minimising problems such as employees being left out-of-pocket. There’s no point in following a recipe when the cake is already in the oven, so explaining the rules after the spend has been made just adds to the confusion.
Organisations that share their “flight plans” with employees reduce uncertainty about where they are headed and why.
There are plenty of ways to put your finance team back in the driver’s seat, but using carefully selected spend controls is a great place to start.
So what benefits do spend controls bring?
Spend controls are essential to help organisations achieve their objectives. They’re key for sustaining operational and financial performance, all while respecting rules and regulations.
Controls come in all shapes and sizes with different advantages, mainly:
- Preventive : Preventive controls aim to reduce the chance of undesirable ‘activities’ before they even happen. Proactive documentation, authorisation and well-thought out processes to identify potential risks are basic necessities for high quality control.
- Detective : The reverse of preventive controls, detective controls aim to find errors after they’ve already happened, so are fundamental in proving whether or not the former is working properly. The most straightforward form of detective control is reconciliation.
- Corrective : Created after a detective process, corrective controls are used to straighten out errors or irregularities that have slipped past your primary controls, such as freezing a credit card if fraud has occurred.
A well-balanced process would ideally include all forms of control, so that no error slips through the cracks. Mistakes will inevitably pop up, even in the strictest organisation, so it’s important to have procedures in place to minimise the damage.
How can Pleo help
Hitting the right balance between trust and control isn’t easy, but it’s so incredibly important to get right. That’s why at Pleo, we’ve built customisable spend controls.
They’re easy to set up and give you full autonomy over your company’s finances, whether your employees are on the road, spending out of-pocket, taking a client out for dinner or simply getting lunch.
- Budgets: Add Tags for specific projects to get a better handle on tracking spend in different places. Need to spend a bit more for a certain client? Simply assign the expense to the Tag associated with them so you can stay within your budget for that client. You can even set up notifications for when you’re approaching your limit.
- Multi-step approvals: No one person can review every expense for an entire company. With Pleo, you can split the review process between team members on both a team and company level. You can even add thresholds for certain people to review certain spend amounts, so you can have the right eyes in the right places.
- Spending limits: Each employee that you choose to have set up on Pleo will only have access to a certain amount of funds, set by you. Rather than individually loading everyone’s cards, you can simply adjust their limit as needed, in real time. You can even set transaction limits, so they can’t spend over a certain amount in one go.
You can also craft your own bespoke expense policy with our expense policy builder. By letting your employees know their food budgets, how they can book accommodation, mileage guidelines and event or conference ticket limits, finance can be totally transparent about how much money to spend and on what.
Taking control of your company finances is easier than you think, and can lead to higher levels of trust between your employees and finance team. Have a look at our spend controls page to learn more about how Pleo can automate your expense management process to make life easier for everyone.