Staff expenses 101 – a tradie’s guide

Being in front of a computer, balancing the books and juggling numbers, is not your natural habit. You’re a sparkie, you do your best work when you’re out and about, on the tools, solving problems. We get it. But here’s the thing when you run a small business – you need to do both. And a big part of juggling those numbers is managing staff expenses.

A coffee here and there might not break the bank, but incidental purchases can build up fast, and ultimately create a massive hole in your cash flow. That’s bad. So chasing receipts, refining your expense policy and monitoring who’s buying what on the company card is crucial.

Key takeaways for electrical contractors

• Set clear spending limits and approval rules before employees start making purchases.
• Make expense policies practical enough to reflect the realities of electrical work on site.
• Ask staff to submit receipts within two business days of a purchase.
• Use digital tools to capture receipts and allocate expenses to individual jobs.
• Watch for patterns such as missing receipts, split transactions and costs that cannot be traced to a job.

So how do you do all of the above without putting out ‘micromanaging boss’ vibes. Jasmine Liu, CFO at Cubic Promote, says it’s all about setting clear expectations and acting early.

“Waiting until something goes wrong before creating a policy is one of the biggest mistakes I see,” says Jasmine.

“If you don’t have clear rules, you can’t get mad when staff get it wrong. You need to be crystal clear about what’s allowed and what isn’t. Set expectations on what can be reimbursed, dollar value limits, and who approves the expense. Set transaction limits on employee cards. Virtual employee cards are a great way to manage this.

“If your team knows what’s allowed and understands the process, there’s less correspondence and back and forth explanations – that’s what makes people feel micromanaged.”

Bernadette Garratt, Partner at Roberts + Morrow agrees, adding that your policy also needs to match the work that actually happens on site.

“For example, if a technician is on an emergency call-out and needs a part immediately, the policy has to explain what is approved, what evidence is required and who signs off,” she says.

“Keep the rules short, practical and visible: approved suppliers, spending limits, receipt requirements, vehicle use, meal rules and what needs pre-approval. Staff will follow a policy when it removes doubt rather than creating admin after a long day on the tools.

Speedy reconciliation = good

As part of your policy, Jasmine also recommends a speedy reconciliation process. That means asking the crew to submit receipts for expenses within two business days of the purchase. After all, waiting until the end of the month to reconcile expenses is just going to make your own life miserable. The further away from the date of the expense you get, the harder it is for your team to remember what it was for, let alone find the receipt.

“That includes small items that may seem immaterial, but can very gradually build up – such as client meeting expenses, annual leave that’s suddenly taken and not recorded or approved in advance, sick leave that’s not recorded and travel meal allowances,” says Jasmine.

Bernadette adds that the entire process needs to be moved out of email, gloveboxes and shoeboxes.

“The fastest gains usually come from using a digital capture tool, like Xero, that lets staff photograph receipts straight away, match costs to a job, and send them through an approval workflow. For electrical contractors, the key is job-level coding.”

Beware the red flags

It makes sense – set the policy, people follow the policy, accounting headaches be gone. But what if someone’s not playing by the rules? What are the red flags to look for?

Bernadette has a few in mind…

“Red flags include repeated missing receipts, expenses submitted long after the job is finished, split transactions just under approval limits, frequent purchases from non-approved suppliers, unusually high fuel or toll costs, weekend or after-hours spending that doesn’t match rostered work, and materials that cannot be traced back to a job.”

“Look for explanations of expenses that don’t fit job responsibility or required activities too,” adds Jasmine.

So, where should business owners focus their attention to better manage expenses for long-term growth? You’ll be relieved to hear it’s less about chasing individual receipts and more about investing in systems that show how expenses affect margin.

“For electrical contractors, that means connecting expenses to job costing, vehicle costs, supplier accounts, labour, apprentice costs, subcontractors and warranty work,” says Bernadette. “Using Xero as a data management tool is a good starting point, but then expanding on this with regular reporting gives owners cleaner data, better quoting and earlier warning when a job type, client or crew is no longer profitable.”

Jasmine says learning that not all expenses are created equal is also crucial for business longevity.

“Expenses are necessary to grow the business in line with revenue growth, so focus on making sure those expenses result in new leads and return. That’s when businesses thrive.”

Staff expenses cheat sheet – the do’s and the dont’s

To keep things running smoothly, here’s a quick list to pin to the office wall (or the back of the work van).

Top 5 do’s from Jasmine…

1. Do set clear spending limits before giving employees purchasing authority.
2. Do request receipts and a business purpose for every expense.
3. Do separate personal and business spending completely.
4. Do reconcile expenses frequently rather than discovering problems months later.
5. Do give different employees different approval limits based on their responsibilities.

Top 5 don’ts from Bernadette…

1. Don’t let small consumables disappear into general overheads.
2. Don’t rely on memory or month-end clean-up to allocate costs.
3. Don’t allow everyone to decide what’s reasonable on their own.
4. Don’t assume a full schedule automatically means profitable work.
5. Don’t use expense management as a blame exercise.

Frequently asked questions about staff expenses for tradies