Managing costs, including T&E expenses, is that much harder when an organization spans multiple locations. You have different employees purchasing, approving, and recording the expenses in different places, and so, even with top-notch oversight, keeping an eye on every transaction is difficult. Let alone ensuring that they’re reported accurately and consistently. All that can make setting and tracking your budgets a real headache.
Even so, managing expenses is critical to your company’s success. When the Turnaround Management Society asked more than 400 turnaround and restructuring experts to identify the internal factors that led to corporate crises, they ranked insufficient controls fourth on the list. But don’t worry, there are things you can do to avoid some of this chaos. Here are six steps to track expenses when you’re dealing with teams in multiple locations.
1. Understand Your Expenses
Before you can do anything else, you have to understand the expenses across each location. Is your team trying to present a favorable impression to potential clients or offering lunch to employees attending a lunch and learn? You don’t want to overspend on events that don’t require it and you can’t skimp on the ones that need a bit more attention, says Amit Sharma, Ph.D., Associate Professor of Hospitality Management Finance at Penn State. Your ultimate goal is to understand how T&E expenses contribute to growth and profitability in each office and how that benefits the larger organization.
The best way to learn about your team’s expenses is to connect with the people who are creating and approving them. Find out about their goals, the history of their events, and the kinds of expenses they plan on creating. Consider any limitations they may face. Are they limited by certain vendors because of geography or for other reasons? Do they need more support in booking the right events? Right out of the gate, you may be able to help rightsize some issues they’re facing.
2. Develop a Budget for Each Location
A budget for any location should always take into account the purpose, type, and size of each event, Sharma says. You may be able to start with previous years’ costs. Say you’re budgeting for a holiday party, start by looking at last year’s party to model your costs. And then, adjust your numbers for changes in the number of employees, a different venue or food, and any other factors.
If the event or expense is new, estimate the costs. Work with a caterer and any other vendors to gather information to develop a working budget as best you can.
3. Maintain a Record of the Event
Once your team has put on an event, take a look at the the costs to see how the actual event compared to the plan. Keep a record of the actual dollars spent, compare that to your budget, and identify the causes of variance. Don’t forget to input any purchase orders or receipts into your expense system. When you’re looking at the data, think about a few things. Could the money have been spent better? What can you learn for the future? What will you keep the same, and what will you change?
Go beyond the numbers and pay attention to all facets of the event in your analysis. This could include “the quality of the catering services and food, leftovers, and other qualitative observations,” Sharma says. Learn from all the data and fine-tune future food events and expenses. It may become clear that you ordered more food than you need, so you’ll know to cut back next time. Keep track of this information in an easily shareable spreadsheet so everyone on the team can have access.
4. Encourage Interaction and Communication
Make sure your employees who manage food spend at different locations are communicating with one another. They can and should compare notes on their expenses and events. Shared learning on the nature of their events, costs, vendors, and the type of food served is invaluable to maximizing your food budgets, and will improve all future events.
“There could be potential synergies for ordering,” Sharma notes, particularly if some events take place in the same city. Sharing best practices can help rein in costs and boost the quality of the meals or food purchased. Not only that, share what worked well and what could have gone better. It may help with a future event order to know what foods were popular and ran out quickly, and what other dishes were barely touched.
5. Roll Out an Organization-Wide Budget
Once you have a handle on the various food spending across your multiple locations, it’s time to create a division-wide or organization-wide budget. You can start to track total T&E spending, rather than dealing with it piecemeal. Individual T&E expenses tend to be smaller than many other corporate costs, but, especially across different offices, these can really add up. To keep control over this process, look at both individual and organization spending.
If you’re using spreadsheets or other manual budgeting processes, utilize formulas that can capture the expenses from each location and calculate an organization-wide total. If you’re using a budgeting software, likely there are capabilities that do that automatically, making it simpler for you.
6. Automate Reporting
Manual processes for budgeting and recording your food spend may make sense when you’re considering a single location. But once your organization is growing, or you’re taking into account multiple locations’ spends, they can become much more cumbersome and prone to error. Respondents to the 2017 Annual T&E Outlook and Benchmarks survey by Certify identified the benefits of automating the management of T&E expenses included improved efficiency, reduced processing costs, mobile access, and the fewer duplicate payments.
These benefits are even more pronounced when you’re managing multiple locations. Many automated systems allow you to customize fields so you can easily report expenses by location or department. Many also automatically add up different departments or locations so you can analyze total expenses.
Setting, tracking, and managing your food spend across different locations — with many different people creating and approving expenses — can be a challenge. But by following these six steps, you will start to see how much simpler the process can be for your organization. It will reduce the stress on your team so they can focus on what really matters for your business.
Find out how ezCater can help you streamline budgeting and reporting, and automate compliance with corporate policy when you’re managing T&E expenses across multiple locations.