When it comes to expense accounts, everyone knows regular reviews are important – but actually doing it is a whole different story. Too often, expense account reviews aren’t thorough enough, or are only performed on an ad-hoc basis. That may work in the short term, but it has consequences over time. Inconsistent reviews can lead to lost revenue, jumbled accounts, and even theft. No matter what size your business, maintaining full, frequent visibility into expense accounts is essential.
J.P. Morgan COO Matt Zames has been in the spotlight recently for his determination to cut expenses – and the actions he’s taken contain valuable lessons for companies of all sizes.
Spend a little, save a lot
Zames is taking a close look at all business expenses, from office space to furniture. The Wall Street Journal reports that Zames wrote in his shareholder letter: "We are keenly aware that every dollar of our budget is a dollar of shareholders’ money.” His vigilance is expected to save the bank hundreds of thousands of dollars in annual savings. Not surprisingly, Zames is now rumored to be next in line to take CEO Jamie Dimon’s place. By comparison, reviewing expense accounts isn’t as massive an undertaking – but it can boost your company’s bottom line, improve its reputation, and weed out dishonest workers. And as Matt Zames proved, being expense conscious can also be a savvy career move.
Create a culture of transparency
More organizations are moving toward a transparent approach to expenses. To keep your expense accounts on track and encourage transparency, consider the following actions:
- Set the tone for transparency from the beginning.
Create detailed guidelines for expenses, explaining what is acceptable and why. Make sure that everyone with access to an expense account understands the rules. This will help foster a culture of individual responsibility, and ensure that everyone is on the same page.
- Check every line.
Even if an expense looks acceptable, it still might not be reasonable. Was it truly needed? Does it have a clear business use? Close attention to detail will prevent account holders from buying the most expensive version of a product, or taking advantage simply because they can.
- Treat employees of all levels the same way. Monitoring expense accounts across pay grades and departments can help to keep all account holders on the same level. It sends a message to employees that every dollar counts, and that no one is being treated unfairly. Not only will you gain insight into every dollar being spent, you’ll also help foster a sense that everyone in this together.
Take control of the future
Without regular oversight and consistent communication with employees, company dollars can quietly slip through the cracks. But when everyone with expense accounts are held to the same standards, it becomes easy to see exactly where the money is going, and how you can correct bad habits. Taking back control of your cash flow is one of the best ways to keep your business – and your career – on track.