Even with strict policies and well-planned budgets, out-of-policy expenses and wasteful spending slip through the cracks. 

This happens because employees may not fully understand the policies or find the manual compliance processes tedious. 

For instance, an employee on a business trip might choose a more expensive hotel because they are unaware of the company’s preferred vendor list or because approval delays make booking within policy inconvenient.

Add to this the reliance on traditional expense management methods, which depend on manual reviews or delayed reporting. By the time a manager spots an out-of-policy expense, the damage is already done. Small, overlooked expenses, like unapproved upgrades or excessive meal costs, accumulate and impact the budget over time.

So, in this blog post, we shall look beyond the policies and improving budget control and instead explore strategies for better control over employee expenses.

6 Strategies to Control Employee Expenses

Switching to automation or new tools is an obvious upgrade that provides better control over employee expenses. 

So, in this section, we'll discuss strategies you can implement without overhauling your existing internal systems.

1. Shortlist Preferred Vendors

Shortlisting trusted vendors ensures that employees always choose from pre-approved options with negotiated rates, which keeps costs under control.

For instance, you have a few preferred hotel chains for business travel. By restricting employees to these options, you will benefit from corporate discounts and avoid booking unnecessarily expensive hotels.

How to implement it:

• Identify core vendors for major expense categories (e.g., travel, office supplies, IT services)
• Negotiate contracts with these vendors to secure better rates or discounts
• Create an internal policy that requires employees to choose from the approved list, with exceptions only for specific needs or emergencies

2. Specify Department and Category-Specific Budget

Setting both category-specific and department-specific budgets helps manage costs more precisely. Category budgets ensure spending stays aligned with specific expense types, while department budgets allocate resources based on each team’s unique needs. 

This dual approach prevents overspending in any area and ensures each department and expense category is carefully monitored.

For instance, the marketing department may have a specific budget for advertising, software, and event costs, while the HR department focuses on recruitment and training. Within the marketing budget, there might be separate categories for digital ads and printed materials, ensuring better cost tracking and control.

How to implement it:

• Work with department heads to allocate budgets both by category (e.g., travel, software, training) and by department
• Use tools or spreadsheets to categorize and monitor business expenses at both the department and category levels
• Regularly review and adjust budgets to reflect changes in needs and trends

3. Centralize Subscriptions

Many companies have multiple subscriptions for software, services, or tools. Centralizing these subscriptions in one department or team helps avoid overlapping services and ensures you get the best value for money.

You can centralize such software subscriptions under the IT department, which ensures that no department is paying for duplicate tools. They can negotiate bulk licenses for frequently used software, saving money.

How to implement it:

• Conduct an audit to identify all active subscriptions across the company
• Assign responsibility for managing these subscriptions to a single department, such as IT or finance
• Regularly review subscriptions to ensure they’re necessary and used effectively

4. Enforce a Digital Receipt Policy

Shifting to digital receipt management not only improves compliance but also enhances documentation and auditability. 

With digital receipts, all purchases are automatically stored in a centralized system, making it easier to track, verify, and retrieve receipts whenever necessary. This system provides clear, transparent records that reduce the risk of fraudulent or inaccurate claims. 

Additionally, it simplifies the auditing process, as receipts are easily accessible, organized, and time-stamped, ensuring that all expenses are well-documented and can be reviewed quickly if needed.

So, if an employee submits a meal receipt through a digital platform, the system automatically stores the receipt and flags any submissions that are missing required receipts. During an audit, the finance team can quickly pull up receipts by category, date, or employee to verify compliance, reducing time spent on manual checks and minimizing human error.

How to implement it:

• Set up a digital receipt management system, such as an app or cloud storage solution
• Require receipts to be uploaded within a specific timeframe (e.g., 24 hours after purchase) for reimbursement

5. Implement Multi-Layer Approvals

Implementing multi-layer approvals ensures that expenses are reviewed by multiple people before reimbursement, adding a layer of oversight. This reduces the likelihood of approval for out-of-policy expenses or excessive claims.

For instance, if an expense report for a business trip requires approval from the direct manager and a senior finance officer, it reduces the likelihood of unauthorized spending while ensuring the segregation of duties.

How to implement it:

• Set up an approval hierarchy where lower-level employees seek approval from their direct managers, and higher-level managers review larger expenses or out-of-policy claims
• Clearly define approval limits based on employee roles to avoid bottlenecks
• Use workflow tools or manual systems to route expenses through the appropriate layers of approval

6. Conduct Regular Expense Analysis

Regular expense analysis helps spot trends, identify areas of overspending, and highlight opportunities for cost savings. This proactive approach prevents minor budget leaks from growing into significant issues.

For instance, you notice that employee meal expenses have been rising consistently, even though travel policies haven't changed. By analyzing the data, you realize that the expense limits haven't been updated to reflect rising food costs, which are adjusted accordingly.

Read More: How Do You Analyze Company Expenses and Plan for Next Year? 

Do You Need an Expense Automation Solution?

With all these strategies in place, do you still need to invest in a dedicated tool? 

It’s a valid question. After all, you've already implemented clear policies, budgets, and manual tracking systems. But expense management software provides a level of efficiency, automation, and oversight that manual systems cannot match. 

Expense management software is a tool for tracking, approving, and managing employee expenses on a single platform. It automates everything from receipt capture to policy enforcement, eliminating the need for manual data entry and paper-based receipt management. 

By automating approval workflows, these tools reduce human error, speed up processing, and improve visibility into spending patterns. They also generate detailed reports in real time, giving managers and the finance team an immediate view of where money is being spent and where adjustments are needed.

Most importantly, such tools integrate strategies like vendor shortlisting, category- and department-specific budgets, transaction-level tracking, and digital receipt management into a single platform.

So, instead of juggling multiple systems, everything is centralized, allowing for better policy enforcement and more accurate tracking.

How Expense Management Software Benefits Everyone

Expense management software can transform how you manage company spending, benefiting every stakeholder involved. 

Here is a breakdown of how expense management software benefits each group and helps create a more efficient, transparent, and cost-effective expense management system.

Expense management software is best for businesses that:

• Handle high volumes of transactions or complex approval workflows
• Have multiple departments or teams with different budgets
• Need to gain real-time insights and tighten control over spending

Technically, you can manage employee expenses manually—using spreadsheets, paper receipts, and email approvals. But this often introduces friction into the process. Tracking expenses, verifying receipts, and managing approvals becomes time-consuming and prone to human error. 

As your business grows, these manual systems slow down your workflow, increase mistakes, and make it harder to maintain control over spending.

An expense management tool eliminates this friction by automating and centralizing key processes. Employees can submit expenses directly through a digital platform, reducing the need for paper receipts and manual entry. Managers can quickly approve or reject expenses with automated policy checks to ensure compliance. Finance teams get real-time visibility into spending patterns, making audits and reporting much more efficient.

So, while manual systems work for small teams, an automated solution streamlines everything—from submission to reimbursement—saving time, improving accuracy, and ensuring better budget control. The ability to track expenses in real time and automate repetitive tasks is no longer just a "nice-to-have"; it’s necessary for growing businesses looking to scale.

We’ve written an in-depth article on expense automation to show how it simplifies expense management—check it out.