Issue 10 | Winter - Spring 2024

Managing Business Expenses with Excellence

From purchasing office and lab supplies to traveling on university business, buying goods and services is integral to the university’s ability to advance its teaching, learning and research missions. Previous newsletters addressed various aspects of stewarding business-related transactions (business expenses), including defining the three lines model, selecting a purchasing method for goods and services, engaging suppliers, paying people, and approving financial transactions.


In this newsletter, we highlight best practices for each role involved in the business expense process and identify ways for an individual to review their transactions and proactively address any delays or issues. We also spotlight the role of the department manager and supervisor in the process and provide ways for them to monitor the unit's operations to ensure their team’s success.


This newsletter is organized by role in the business expense process - from all individuals, to unique roles such as department manager or supervisor, requester, preparer, and approver.


Consider bookmarking the best practices and tools suggested in this newsletter for easy access in the future.  Also, to facilitate completing business expense transactions correctly, we have been featuring a series of business expense tips in our Stanford-FMSnews Slack channel during March and April. We encourage you to follow and review these and share them widely in your units.


We recognize that there are a significant number of roles involved in business expense transactions, and appreciate the unique perspectives and responsibilities required to keep the university safe and effectively steward our resources.


Anne Sweeney-Hoy

Senior Associate Vice President for Finance

The shared and unique roles in an expense transaction

This newsletter addresses best practices and common questions or issues that arise for all business-related expenses (“business expenses”), regardless of how the expense is paid. Business expenses include those incurred for university-sponsored travel, consulting, hotel or other venues, other business activities such as meals, and the purchase of office and lab supplies.

Everyone has a role: Responsibilities of all individuals involved in the process

 

Specific roles

Described below are the four key roles in a transaction: Department manager/supervisor, requester (or traveler), preparer (or verifier for PCards), and approver.

  1. Department Manager/Supervisor: These individuals oversee the finance and administrative functions in their unit, either directly or indirectly. These individuals establish the environment in which everything else occurs, including setting the tone and direction for their units and the employees they manage.

    As part of their role, department managers should establish and communicate standard department practices for routine business-related expense transactions, including ensuring that transaction support is appropriately resourced, staff responsible for these transactions have the right skills and are appropriately trained, and supporting tools (e.g., PCards and TCards) are in place.


    One of the most important roles of a supervisor or manager is to help their staff be successful and ensure the work of their team is completed appropriately and in a timely manner. By monitoring risks and identifying issues as they arise in the department, a manager can be proactive in addressing issues.

    And of course,  when the opportunity arises, department managers want to ensure they hire people with the right skills to perform the job, see the Talent Acquisition and Recruitment Process.

  • To shorten the days to verify, they created a template for recurring transactions with the same business purpose.

  • To shorten the days to approval, they removed the additional approvers for the lower risk transactions.

  • To reduce returns from approvers, Priya bookmarked expenditure type resources on Fingate to help her select the appropriate expenditure type when verifying transactions.


Priya Parer thanked the manager for support in identifying helpful ways to improve her PCard verification process.

Best practices and tools to help managers support their teams and identify and address problems promptly include:

 

  1. Requester (or Traveler): This individual identifies the need for the goods or services, clearly articulates the justification for the expense and how it benefits the university, and ensures it is an appropriate business expense. This explanation provides the basis for the business purpose description that the Preparer will complete.


To expedite the transaction, best practices for the Requester (or Traveler) include:

  • Providing as much information as possible to the Preparer before the Preparer initiates the transaction. This information should include the business purpose components.

  • Ensuring that the supporting documentation provided is complete so that anyone reviewing or approving the transaction has the full context and can make a fully informed decision.

  • Using eReceipts, a mobile-friendly interface that captures images of business and travel-related receipts, to expedite and facilitate transaction processing.

 

  1. Preparer (or Verifier): This individual prepares and facilitates the transaction. Once the requester identifies the need, they coordinate with the Preparer, who determines the best method for purchasing the goods or services, makes the purchase, and initiates the transaction in the financial system.  

To expedite the purchase, the Preparer should follow several best practices unique to their role:

  • Select the best method to procure the goods or services. Note: certain policies dictate which payment method can or cannot be used, typically because there are specific external compliance requirements for that category (e.g., capital equipment).  

    • To expedite the process if a new supplier needs to be set up, the preparer should work with the supplier to provide complete and timely information as explained in Setting Up a New Supplier or Visitor Payee.  

    • If personal reimbursement is the appropriate path, the preparer should perform their due diligence before the purchase is made to prevent delays. This includes ensuring the expense is reasonable and within university guidelines, as well as obtaining documentation before purchasing (e.g., comparisons) and after purchasing (i.e., folio, receipts, conference schedule).

    • If a contract is required, the Preparer should work with the appropriate Purchasing/Contract office to avoid delays.

    • The best purchasing method may also depend on the frequency of the purchasing need. For example, if the department commonly incurs travel-related expenses, consider obtaining a department Travel Card. Or, if the department needs certain supplies throughout the entire year, it may be more efficient and cost-effective to order these through SmartMart Catalog Suppliers, rather than using a Purchasing Card repeatedly.

  • Ensure that the business purpose is properly completed and that the supporting documentation provided is complete so that anyone reviewing or approving the transaction has the full context and can make a fully informed decision. Also include any exception pre-approvals and/or explanations for out of policy expenses.

  • Caution: Don’t add too many extra approvers as this may slow the process down. The Financial Transaction Approval, Workflow Participants and Routing section of the Financial Transaction Approval page explains the workflow participants in a transaction, including FYI recipients and Central Office participants.

    • Use the FYI Recipients function to notify others who should be aware of the transaction when their approval is not necessary.

    • The beneficiary of the expense should not be a direct or indirect supervisor of the approver for the expense. In these cases, an additional approver who is independent and outside of the line of supervision should be added.

    • Independent Reviews of Senior Executive Expenses are an additional safeguard to ensure that someone who does not directly or indirectly report to the Senior Executive reviews and approves their transactions.

    • Central Office approvers are automatically added based on pre-set business rules in the system, such as when the university requires validation of competitive supplier selection. 

  • Monitor your transactions using Pending Transactions to track a transaction's progress on a regular basis. Within this tool:

    • Pending with Others will allow you to see the next approver so that you can follow up with them if needed.  

    • Uncleared PCard, TCard, and Advances reflect transactions within your scope of responsibility that have not yet been cleared.

Often these issues come to light during the approval process in the unit or during the central office review, and at times after the costs have been incurred.


Once expenses have been incurred, the consequences of making corrections can be more severe, with individuals having to repay expenses, not receiving the full expected reimbursement, or being tax reported (based on IRS requirements) for expenses that were not submitted on time.  


Fostering an environment of open communication, where appropriate planning conversations can occur, helps to facilitate an effective and efficient business expense process. Schools/business units who maintain a defined escalation contact have seen an effective resolution to these dilemmas and a benefit to their employees. If the issue cannot be resolved within the unit, the Ethics and Compliance Helpline and Ombuds Office (or School of Medicine Ombuds for SoM related issues) are additional resources where you can report or obtain help addressing concerns anonymously.

  1. Approver: This role approves a transaction after verifying that the transaction is appropriate, or rejects or returns the transaction to resolve issues. Financial approval in the school or unit is a key preventative internal control and is explained in Financial Transaction Approval. Financial approvers for business-related expenses are selected based on who has been granted financial authority for the organization or PTA in Authority Manager. A previous newsletter also emphasizes the importance of the approver’s role and their responsibilities for verifying that the expense is:

  • Reasonable and necessary

  • Consistent with university policies

  • Consistent with sponsor or donor requirements

  • Coded correctly

  • Properly documented


To expedite the transaction, best practices for the approver are to:

  • Be familiar with and/or use the Expenditure Transaction Approval Checklist when reviewing all transactions (requisitions, expense requests, PCards, TCards, and non-PO payment requests).

  • Monitor transactions to identify untimely or stuck transactions. The Pending Transactions helps preparers, verifiers, and approvers to review all of their pending purchases and business expense transactions in one place.

     

When monitoring their transactions, the Requester, Preparer or Department Manager may notice that the Preparer or Approver on the transaction is no longer valid (either they left the university or changed departments and their authority has changed). The person who identifies this should ask the preparer to recall the transaction or submit a support request. If the preparer has left the department, the department manager should reach out to the Financial Support Center (FSC).

Avoiding a top rejection reason: Incomplete or missing beneficiary information

A common reason that business expense transactions are rejected is because the beneficiary information is either incomplete or incorrectly calculated. The beneficiary field in ERS is used to identify the person(s) benefiting from the expense, which is sometimes different from (or in addition to) the payee. Adding beneficiaries and the relevant portion of the expense that benefitted them does not impact reimbursement to the payee; it is used for tax compliance reporting, spend reporting, and informational purposes for management reporting only. Here are some helpful tips:

  • Include all individuals whose presence or involvement causes additional expenses to be incurred as a beneficiary on an expense request. For example, include an additional guest at a meal, but do not include an additional rider in an Uber.

  • Include visitors as beneficiaries. If they are not in the payee system, they can be added as "Other."

  • If a department Travel Card is being used to pay for travel expenses that are not for the cardholder, include the traveler as the beneficiary.


To learn more, see the Guidelines for Entering Expense Report Beneficiaries.


The other most frequent reasons that business expense transactions are rejected or returned by the Central Office are: insufficient business purpose, missing or insufficient documentation, and incorrect business type. Follow the Stanford-FMSnews Slack channel as we continue the series of these tips through April.

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