Managing employee expenses is a core challenge for many SMEs. Unmonitored spending, manual expense tracking, and a lack of visibility can quickly lead to budget overruns, inefficiencies, and financial waste. Getting control is vital.
At the same time, you want employees to make smart decisions and spend where required. For finance leaders, controlling employee spend isn’t about restricting employees—it’s about giving teams financial accountability, optimising budgets, and ensuring operational efficiency.
Finding the right balance between “in control” and “overly controlling” can be difficult, especially without the right tools. In this guide, we explore key strategies to manage employee expenses, and how modern spend management platforms can help businesses scale efficiently, cost-effectively, and with full financial visibility
Why managing employee expenses matters
Most small-to-medium businesses need to let some employees spend company money from time to time. Whether those are travelling team members visiting clients, office managers buying supplies, or IT professionals purchasing subscriptions, a certain level of freedom makes work more efficient and enjoyable.
The alternative is hoarding the company card and preventing anyone else from spending, ever. Which is neither scalable nor effective in the long run.
But when employee expenses are not actively managed, problems can arise. It doesn’t take long before you face:
- Budget overruns. Without careful monitoring (in real time), teams can easily go over budget.
- Non-compliant costs. This includes spending that doesn’t meet your company policy or is forbidden by the tax authorities altogether.
- Fraudulent expenses. Subpar processes make it easier for fraudulent claims to slip through, whether intentional or not.
- Inefficiency & wasted time. Paper-based expense claims and slow approval processes delay reimbursements and impact cash flow.
- Hidden costs. Currency conversion fees, late payments, and lost receipts can add up over time, hurting profitability.
As we’ll see, the best solution is a simple spend management system, and the right automated workflows. But first, here are some best practices to get employee expenses under control.
5 strategies to control employee spending
Whether using dedicated spend management platforms or a mix of other modern tools and practices, here are five steps you should take to get a handle on employee costs.
1. Set clear spending policies
A well-defined expense policy is the foundation of effective spend management. Employees need clear guidance on what can and cannot be claimed as a business expense.
Your policy should include:
- Clear limits for travel, meals, office supplies, and entertainment.
- The approval process for different types of expenses.
- Examples of generally approved costs, and those that should be avoided.
And crucially, your policy should be clearly communicated and easy to find to ensure compliance and avoid confusion.
2. Use corporate cards with pre-set limits
Traditional company credit cards are always unwieldy. Either one or two executives guard their cards rigorously—becoming a bottleneck for everyone else—or the cards get shared around the company, quickly leading to overspending. Either way, finance teams have no idea what’s spent until they receive the bill.
Instead, businesses should use corporate expense cards with spending controls. These let you:
- Issue virtual and physical corporate cards to any employee.
- Set spending limits per transaction, per day, or per category.
- Restrict card usage to approved vendors or specific expense categories.
Because the cards are in individuals’ names, you always know who’s spending company money.
Tip: Virtual cards are a great way to control online subscriptions and supplier payments. They’re safer to use online and can be cancelled any time, reducing fraud risks. And you don’t end up with 30 pieces of software on one company card, with no idea who’s in charge of each.
3. Automate expense tracking & approval workflows
Manual expense tracking is time-consuming and prone to errors. You either have a lax system where payments aren’t closely monitored—a risky option—or every single payment is manually approved and recorded, which becomes another bottleneck to growth.
An automated system speeds up the process, reduces errors, and ensures compliance. Key automations to implement:
- Employees upload receipts instantly via an app, rather than filling out and submitting paper (or PDF) expense reports.
- Expenses are automatically categorised based on spending rules.
- Approval processes are streamlined with pre-set workflows, and managers are notified instantly to approve certain payments.
Because the cards are in individuals’ names, you always know who’s spending company money.
Tip: Automated approval flows remove grey areas and seriously reduce expense fraud.
4. Gain real-time visibility over spending
SMEs routinely spend weeks or months defining budgets, only to have teams blow past them without realising. Most managers aren’t finance experts, and most teams have no idea how much they’re actually spending.
To prevent budget leaks, finance teams need real-time visibility over spending.
- Use dashboards to track expenses by department, project, or employee.
- Identify patterns, flag unusual spending, and adjust budgets accordingly.
- Monitor payments across multiple currencies and locations.
Tips: Regularly reviewing reports helps optimise budgets and forecast future expenses more accurately.
5. Eliminate foreign exchange & late payment fees
Here’s one you probably haven’t even considered. For businesses making international transactions or foreign business travel, Foreign Exchange (FX) fees and late payment penalties can be a major financial drain. They’re not typically factored into the cost of goods and services, but the impact on your cash reserves is real.
Best practices for reducing these costs:
- Optimise FX payments to avoid high conversion costs.
- Automate vendor and payroll payments to ensure on-time transactions.
- Track invoice and card payments automatically to ensure you never miss a scheduled transaction.
Did you know? Late payments cost SMEs on average £22,000 a year, with 56 million total hours of lost productivity.
How to prevent employee expense fraud
Expense fraud is one of the most common financial risks businesses face, set to cost businesses more than US$200 billion per year. With the right tools, finance teams can mitigate risks and prevent unauthorized spending.
Common types of expense fraud:
- Duplicate receipts: Submitting the same expense multiple times
- Personal expenses disguised as business costs: Charging personal meals or travel to the company
- Inflated claims: Exaggerating the cost of legitimate business expenses
- Fictitious expenses: Fabricating receipts for non-existent transactions
How Spend Management Platforms Help Prevent Fraud:
- DAI-driven detection flags duplicate or suspicious transactions
- Approval workflows prevent fraudulent claims before they are paid
- Corporate card controls ensure spending is within pre-approved categories.
How spend management gives you full control over employee expenses
We’ve seen five key strategies to keep control of employee spending. All of these steps are made exponentially easier with the right technology: a good spend management platform.
Spend management systems are purpose-built to keep costs in check, automate approval workflows, and help finance teams oversee what’s being spent. Here’s how the right platform takes all of the energy and effort out of those five key strategies above.
- Maintaining expense policies
Spend management platforms set clear parameters to ensure that all spend is necessary, on-budget, and validated in advance. They do this thanks to:
- Customisable spend rules that let your finance team set policies for each department, team, or individual employee.
- Automated alerts to notify managers of policy breaches before expenses are processed.
- Role-based permissions which ensure only approved expenses are reimbursed.
Customisable spend rules that let your finance team set policies for each department, team, or individual employee.
Automated alerts to notify managers of policy breaches before expenses are processed.
Role-based permissions which ensure only approved expenses are reimbursed.
- Establishing smart expense cards
The best platforms provide you with Visa or Mastercards with preset limits, each in the name of an individual employee. You always know exactly who spent what, where, and why.
These smart corporate cards offer:
- Customisable limits set to specific employees or teams.
- Real-time tracking for all transactions.
- The ability to instantly block cards and prevent unauthorised spending.
- Instant reporting that lets finance teams track and analyse every expense.
- Virtual cards for online payments, including recurring subscriptions.
- Automating expense claims & approvals
The most immediate benefit of spend management platforms is in removing manual data entry for expenses. Employees take a photo of their receipts or upload invoices, and the platform does all the work from there.
They also help create smart approval workflows to ensure that managers always review payments before they’re made.
Key features to look for include:
- Automated receipt scanning to eliminate manual data entry.
- Approval rules that ensure only valid expenses are processed.
- Real-time tracking to reduce admin work, and accelerate employee reimbursements.
- Getting real-time visibility over spending
It’s virtually impossible to keep control over spending if you can’t easily see who’s spending what. Spend management gives you:
- Live dashboards with a clear view of company-wide spending.
- Customisable reports that help identify cost-saving opportunities.
- Automated insights which detect spending anomalies before they impact budgets.
- Avoiding foreign exchange & late payment fees
FX fees can really add up to become a significant hidden cost for SMEs. As can late payment fees, particularly if they occur frequently.
How spend management platforms help:
- Multi-currency business accounts eliminate high FX fees
- Automated vendor payments ensure global transactions happen on time
- Competitive exchange rates help businesses save on international transactions.
Take full control over employee spending
Managing employee expenses doesn’t need to be a complicated or cumbersome task. When approached with the right strategy, tools, and mindset, you not only simplify the process, but also unlock opportunities for cost savings, operational efficiency, and overall financial health.
With real-time tracking, finance teams gain immediate visibility into spending patterns, which enables them to identify and address any discrepancies or overspending in a timely manner. This approach ensures that budgets are adhered to and compliance is maintained all across the organization.
- Why finance leaders prefer OFX for spend management
Finance teams need a secure, scalable, and automated solution to manage expenses effectively. OFX’s Spend Management Platform provides:
- Total spend control: Set limits, restrict non-compliant transactions, and track every expense
- Real-time monitoring: Gain instant visibility over corporate expenses with live dashboards
- Automated payments & approvals: Reduce admin work, cut manual errors, and speed up processing
- Competitive FX rates: Save on currency conversion fees and simplify global payments all in one platform – use our hedging tools to manage currency risk too
- Secure and scalable processes: Support business growth with a fraud-resistant, fully compliant platform.
Ready to take control of your employee spend? Book a demo of the OFX Spend Management Platform today.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.
