Implementing Pleo: Proactive expense controls and empowerment within clear boundaries

How to Set Up Expense Controls in Pleo for Your Startup

For founders and operations leaders at early-stage startups, managing team spending can feel like a contradiction. You need to empower your team to move fast, buy the software they need, and travel to meet customers. Yet, you also need to protect your runway from surprise overspends and accelerated cash burn. Giving out company cards without guardrails is a significant risk, but manual expense reports are a time-consuming bottleneck that slows innovation. The core challenge is achieving financial control without creating bureaucracy.

This is where modern startup expense management tools like Pleo become essential. However, just adopting a tool is not enough to solve the problem. The key is to implement it with a clear framework that balances autonomy with accountability. This guide provides a practical, three-layer approach to setting up expense controls in Pleo, designed specifically for the realities of a pre-seed to Series B company where the founder or ops team often runs finance.

A Foundational Framework: The Three Layers of Smart Expense Control

Instead of reacting to expenses at the end of the month, a smart system prevents problems before they happen. What founders find actually works is a structure built on three distinct but interconnected layers. This approach transforms your finance function from reactive cleanup to proactive management, answering the key question: How do you give your team the freedom to act without risking a surprise on your bank statement?

The three layers are:

• Proactive Limits: Automated spending caps that prevent overspending from the outset.
• Real-time Reconciliation: Instant receipt and transaction matching that bulletproofs your books.
• Intelligent Review: Risk-based approval workflows that provide oversight without micromanaging.

This framework provides empowerment within clear boundaries, moving you away from patchy approval workflows and toward real-time spend visibility. It’s about building a system that scales with you from your first hire to your hundredth.

Layer 1: Setting Proactive Spending Limits to Prevent Overspend

The most effective way for controlling team expenses is to set clear, automated limits before a single transaction occurs. This is the difference between proactive control and post-spend oversight. Pleo allows for two types of limits that work together: a monthly spending limit and a per-purchase limit. The monthly limit controls overall cash burn for an individual, while the per-purchase limit acts as a guardrail against large, erroneous, or unapproved single purchases.

Why Role-Based Limits Are a Non-Negotiable

Establishing these limits should be based on roles and responsibilities, not just seniority. A junior salesperson who travels frequently may need a higher budget than a senior engineer who rarely makes purchases. The goal is to provide what each role needs to be effective, removing financial friction from their day-to-day work. This role-based approach ensures resources are allocated where they generate the most value.

A sensible starting point for most startups is a default monthly spending limit of $500 to $1,000 per employee. This typically covers software subscriptions, office supplies, and occasional travel. For roles with higher, more consistent needs, a higher tier limit for department heads or frequent travelers is often around $2,500 per month. As a universal backstop, a common per-purchase limit used as a guardrail is $500. This ensures that any larger expenditure requires a conscious review or a temporary limit increase, preventing costly mistakes.

Example: Pleo Card Limits Setup for a 25-Person SaaS Startup

Consider how a SaaS company might structure its spending tiers:

• Standard Tier (Engineering, Product, Ops): A $750 monthly limit with a $500 per-purchase limit. This tier is designed to cover necessary software tools, professional development books, and occasional team lunches without requiring special permissions.
• Sales and Marketing Tier (Sales Reps, Marketers): A $2,000 monthly limit with a $500 per-purchase limit. This higher budget accommodates regular travel, client entertainment, and ad-hoc campaign costs that are essential for revenue generation.
• Leadership Tier (Founders, Department Heads): A $3,000 monthly limit with a $1,000 per-purchase limit. This provides the flexibility needed for strategic expenses, team-wide purchases, and other costs associated with managing a department or the entire company.

This tiered, role-based system provides clarity and predictability, directly preventing the uncapped card usage that leads to surprise cash burn.

Layer 2: Automating Receipt Capture to Bulletproof Your Books

Missing receipts are more than just an administrative headache; they represent a direct financial loss and a significant compliance risk. They jeopardize both audit readiness and your ability to close the books on time. For startups with a UK presence, the stakes are even higher. In the UK, missing receipts on VAT-able expenses results in a lost 20% refund, as detailed in HMRC VAT record-keeping guidance. Similarly, US businesses must adhere to IRS recordkeeping guidance to substantiate expenses or risk them being disallowed during an audit.

Making Real-Time Reconciliation the Default

Chasing down team members for crumpled receipts from last month is a poor use of a founder’s time and delays financial reporting. This is where digital receipt tracking for startups becomes a non-negotiable. The solution is to capture the receipt at the point of purchase, eliminating the possibility of it getting lost. With a tool like Pleo, employees get an instant notification on their phone the moment they use their card, prompting them to snap a photo of the receipt. The app then uses OCR to match the receipt to the transaction data automatically.

For online purchases and subscriptions, the process can be even more seamless. Pleo’s Fetch feature, which integrates with Gmail and Outlook, can automatically find and attach digital receipts and invoices from a user's inbox. This completely automates expense reporting for recurring software costs from vendors like AWS, Slack, or HubSpot.

The practical consequence tends to be a dramatic reduction in time spent on the month-end close. Instead of a multi-day scramble to match transactions in Xero or QuickBooks to a pile of receipts, your finance lead sees a real-time stream of reconciled transactions. Each one arrives pre-categorized and with documentation attached, ready to be exported. This real-time reconciliation not only secures your VAT reclaim but also gives you an accurate, up-to-the-minute view of your company’s spending.

Layer 3: Designing Approval Workflows That Add Clarity, Not Clicks

As a startup grows, the need for oversight increases, but you don't want to become a bottleneck by personally approving every $10 coffee. The key is to design lightweight, risk-based employee spending approvals that reflect your company's stage. The reality for most pre-seed to Series B startups is that you don't need complex, enterprise-style approval chains. You need a system based on the principle of 'management by exception'.

When to Implement Multi-Step Approvals

For most companies under 30 people, a simple, single-step review is sufficient. A team member makes a purchase, their direct manager gets a notification, and they approve it. This provides basic oversight without creating friction. However, multi-step approvals become important when a startup crosses approximately 30 to 40 employees. At this stage, you need to introduce more structure to manage larger budgets and delegate authority effectively.

A smart way to implement this is with threshold-based reviews. For example, a marketing manager might have the autonomy to approve any expense for their team under $1,000. This empowers them to manage their daily budget without constant intervention. However, any expense above that amount would automatically trigger a second approval step. A common practice is that a second-level review is typically used only for expenses over a material threshold, such as more than $1,000. This second request would go to a founder or the head of finance, ensuring senior oversight on significant expenditures.

Example: Threshold-Based Review in Action

Imagine a marketing team planning an event. The $300 for flyers is approved solely by the Marketing Manager. The $800 for a catering deposit is also approved by the Manager. But the $1,500 venue hire, because it exceeds the $1,000 threshold, automatically routes to the COO for final sign-off. This system adds a crucial layer of control on high-value items without slowing down the 95% of routine purchases. This is how you design a workflow that adds clarity, not clicks. For small finance teams, it is also wise to consider a formal segregation of duties policy to reduce fraud risk.

Practical Takeaways for Implementation

Implementing a tool like Pleo is not just about technology; it’s about designing a process that builds financial discipline while maintaining agility. The three-layer framework provides a clear path to get there.

First, start with proactive limits. Define role-based spending tiers that give your team the budget they need but prevent significant overspend. Differentiate between monthly caps to control overall burn and per-purchase limits to prevent large one-off errors.

Second, make real-time reconciliation the standard. Onboard your team with the "why" behind instant receipt capture, especially the financial impact of VAT reclaim for UK-based operations or IRS compliance for US entities. Leverage automated tools like Fetch to eliminate the manual work of collecting digital invoices for your SaaS subscriptions.

Third, build an approval workflow that fits your current size. Start with a simple manager review. As you scale past 30-40 employees, introduce a second layer of approval for material expenses over a set threshold, like $1,000. This ensures senior oversight where it matters most, embodying the principle of 'management by exception'.

Finally, the process is only complete when this data flows seamlessly into your accounting system. Whether you use QuickBooks for your US entity or Xero for your UK operations, the final step is integrating Pleo to sync categorized, documented transactions directly. This not only saves hours of data entry but provides the real-time financial visibility needed to manage your runway effectively. To learn more, continue with broader internal controls at our hub.

Frequently Asked Questions

Q: How should we handle one-off purchases that exceed an employee's limit, like flights or conference tickets?
A: Pleo allows admins to grant temporary limit increases for specific, pre-approved purchases. The employee can request a top-up through the app, and once approved, the limit is raised for that single transaction. This maintains control while providing the flexibility needed for legitimate, high-cost expenses.

Q: What's the best way to roll out new expense controls to the team to ensure adoption?
A: Successful adoption depends on clear communication. Hold a short training session explaining not just how to use the tool, but why the new process is important for the company's financial health and how it benefits them (e.g., no more out-of-pocket spending). Lead by example and ensure managers enforce the rules consistently.

Q: Can Pleo categorize expenses automatically for our accounting software?
A: Yes. You can set up custom categories in Pleo that map directly to your chart of accounts in QuickBooks or Xero. Pleo uses machine learning to remember how you categorize certain vendors, automating the process over time and ensuring consistency in your financial data.

Q: Is setting up expense controls in Pleo difficult for a founder without a finance background?
A: No, platforms like Pleo are designed for founders and ops managers, not just accountants. The setup is intuitive, guiding you through creating spending limits, categories, and approval workflows. The three-layer framework in this guide provides a clear blueprint to follow for a robust setup.