How Better Expense Management Drives Better Decisions
Expense management software can be used to help your company make better decisions. This type of software indirectly drives business growth, since it helps your team to make choices that improve your performance. Many managers know that they need to improve their business decisions. But they feel overwhelmed by all the accounting to be processed on a daily basis.
Expense management is the process that you use to report on your employee expense claims and pay them. These expense claims include gas, train tickets, work shoes and briefcases. Good expense management software allows you to keep track of all the spending that is done by the employees in your business. You can focus on increasing spending on the transactions that are helping your business to thrive. At the same time, you can eliminate or reduce the ones that are not promising a good return on investment.
Here is what you will learn:
- Why is expense management important?
- Disadvantages of a paper receipt system
- Disadvantages of spreadsheets
- How to make expense management better
- The 10 benefits of expense management software
Why is Expense Management Important?
All businesses need to pay attention to expense management. Even if you have a small team of less than ten people, poor spending can quickly deplete your resources. Many businesses spend more than they should on sales travel and find that they aren’t getting the returns on sales to offset that cost.
Good expense management software helps you to pay your bills on time. Without it, you may have unexpected bills that you cannot manage and have employees coming to you with bills that you cannot accommodate. You likely have employees who perform essential functions that involve travel outside the office. You may not be able to budget for those costs, if you aren’t tracking them.
Expense management software helps you to keep relationships with your employees healthy. People don’t like to use spreadsheets for expenses and hate having to wait a long time before they receive their reimbursement. By using expense management software, you can ensure that you reimburse all of your employees in a timely manner. This helps to keep all the operations of your business moving along efficiently.
Disadvantages of A Paper Receipt System
Paper tracking is the old way of tracking expenses. With this type of system, employees hand in all of their receipts to the accounts department and receive their reimbursement based on those receipts. This involves a lot of stress, since employees may forget to submit their receipts. Receipts may also be misplaced or damaged.
A paper receipt system involves a lot of storage. For example, if you have 50 employees and all of them incur expenses: That is a lot of paperwork to store each month. It is an inefficient system. A paper receipt system also introduces significant delays. The person who has to approve each payment often does not do so on a daily basis. In some cases, approvals take place on a quarterly basis. Employees must wait for months before they can get their money.
While employees are waiting for months, business has to go on. They must still do their job and have to take money out of their pocket to pay for what they need. Even the most dedicated employees may not have the cash to fund that. Hence, they will cut back in order to save their own pocket. That type of delay in payment negatively impacts your business.
The delays with a paper system may lead to another problem. The request for approval may indicate transactions that the accounting department would not approve. It should not take long for an accountant to realize that spending is misaligned to the goals of the company. In fact, in many cases, because feedback is not occurring in real time, companies waste a lot of cash.
Disadvantages of Spreadsheets
Many companies do without the inconvenience of using a paper management system by using spreadsheets. This has several advantages and reduces the workload associated with a paper management system. Despite that, you won’t get the level of automation and time saving benefits that expense management software offers.
Some accountants find that entering information in a spreadsheet is tedious. It is also sometimes harder to track errors when they are in a spreadsheet. Despite that, this is a helpful option for managing expenses. You want to get an accurate, real-time picture of what is happening in your business. And expense management software handles all the data better than a spreadsheet would.
How To Make Expense Management Better
A lot of transactions take place every day when you are running a business. It is not easy to keep track of all of them manually. By missing out on just a few of these every day, you could be losing money and not knowing why. If you cannot track your expenses, you won’t have an accurate picture of how employees spend your money.
The constant stream of transactions varies depending on your industry sector and the unique characteristics of your business. Some businesses may even have work-related expenses supporting their staff with education. Some may assist with transportation to and from work.
For example, a sandwich shop may have expenses which include:
Plates; City sidewalk maintenance; Cleaning inside your café; Laundering staff uniforms; Floor decor; Fresh bouquets on the tables; Transportation for some staff members; Delivery to some of your clients; Newspapers and magazines; Fresh vegetables.
While each of these are small payments, all of them are significant. They add up over time, and they affect your bottom line. If you are buying train tickets for staff and you spend $1,000 more than you need to every month, that impacts your profits. You can track and monitor all your employees’ spending and see what you need to adjust.
Benefits of Expense Management Software
Here is why you should be using a dedicated expense management solution, and how it will help you make better business decisions:
- Automatically populate expense reports
- Manage unexpected expenses with virtual cards
- Empower employees with monthly budgets
- Complement your existing accounting software
- Expedite workflows
- No financial strain on employees and better accounting
- Increase controls
- Provide timely and accurate data
- Better reports
- Accessible dashboards
1. Automatically Populate Expense Reports
The expense management software that you select can instantly populate expense reports. This means that you can use it to save time in your large organization or small business. A good software can even decipher crumpled receipts, so that you can reimburse your employees without delays.
Expense management software lets you know what is taking place inside your business without creating extra stress. It takes a bit of time learning how to use the software. But once you’ve mastered it, you can start reaping the benefits. You will be more aware of what is taking place in your business on a daily basis.
2. Manage Unexpected Expenses with Virtual Cards
Expense management software help managers to respond to needs that arise that are outside their budget. Virtual cards which come with the software make it easy to cover the expenses of employees when they are traveling. Managers can use these virtual cards to make quick choices about spending.
Recommended reading: Virtual Cards: Protection, Prevention and Payments
3. Empower Employees with Monthly Budgets
Your employees will know how much they can spend each month. In this way, they can plan for all of their activities and respond to opportunities. Expense management software makes it easier to prevent overspending in this way.
4. Complement Your Existing Accounting Software
The expense management software that you use can be used to complement the accounting software that your company already uses. You won’t need to spend time adjusting much as these packages are intuitive.
Good apps are designed for use by members of your team who don’t have a background in finance. They can upload their receipts with ease on their own. This type of software is cloud based and that makes it easy to manage large quantities of data.
You can pull reports at any time, from wherever you are in the world. This makes it easy for managers to give their input on decisions even if they are not located at your main offices. There’s no need to view physical paperwork and none of the delays associated with systems that don’t process data as quickly.
5. Expedite Workflows With An Expense Management System
Real time data helps you to ensure that your spend is aligned with your business goals. If employees are spending in a way that doesn’t benefit the business, you’ll be able to make decisions about that immediately.
Thanks to automated workflows, employees will no longer spend countless hours filling out paperwork. They can put their time and talents to better use and contribute in a more strategic way to business growth. Happier employees are more willing to contribute new ideas to the organization, and they will offer suggestions because they think those will be implemented.
6. No Financial Strain on Employees and Better Accounting
With the virtual cards that available in advanced expense management platforms, there is no financial burden on your employees and less paperwork for everyone. You’ll have a more agile accounts department that’s no linger bogged down by needless paperwork. They can focus their efforts on helping the organization to react quickly to changes in the marketplace. When you need financial reports for other areas of the business, they can respond more quickly.
Once a manager reviews a report and accepts the claim, it is sent to the accounts department. This happens automatically and finance can reimburse the employee right away. This significantly reduces the delays associated with other methods of expense management. Is your business currently having problems as a result of employees being paid only after months? Expense management software is the solution that can help to make everyone on your team happy.
Recommended reading: Guide to Managing Company Spend in the Remote Workplace
7. Increase Controls
You can increase controls of employee spend by introducing automated rules. You can always do audits more easily and with automation, errors in expense reports typically decrease.
When business travelers are unable to submit their expense claims on time, invariably a lot of reports come in at once. This rush for cash can cause problems with your cash flow.
Automation increases your control over your flow of cash. You can more reliably predict when you will need to reimburse business travelers and other employees.
8. Provide Timely and Accurate Data
Most executives agree that the key to navigating uncertain times is maintaining business agility. Organizations must be able to respond quickly based on accurate data. This way they can keep up their revenue levels and be responsive whenever the unexpected happens.
When you choose to use expense management software, employees can submit their receipts as soon as they receive them. This reduces the likelihood of receipts getting lost or damaged. You can also validate the information that you receive easily when it is submitted via that platform.
When your managers receive data on a team’s current expenses, they can make better decisions about the company’s travel plans. They can adjust plans more quickly so that they don’t go over budget. They can also provide assistance that helps the team overseas to achieve the company’s goals.
9. Better Reports
You can develop reports in much less time with appropriate software. You can quickly get an overview of your business’ expenses and make decisions based on what is happening, not what you think is happening.
10. Accessible Dashboards
Expense management software brings access to data to everyone in your team. With a spreadsheet and with paper systems, it is difficult to just readily gain the type of information that you need. You likely want to know how much money employees have spent on travel during the past week. You’re not likely to be able to do that easily with a manual system.
Software gives you immediate access to reports. You can generate any report that is relevant to an upcoming meeting. You can weigh the pros and cons of different alternatives based on the facts analyzed in these reports.
Conclusion
Businesses can only move forward if they gain actionable insights. Some businesses will not gain these insights because information is not flowing in real time. Several businesses will always react more quickly to changes in the landscape because they can quickly receive and analyze data related to employee spending.
Data is driving change in every sector. Don’t be left behind in the race to improve your business processes. Use expense management software to guide the decisions that you make and use your resources more efficiently.
About Volve
Volve’s corporate card comes with an automated expense management solution and reporting tool. This enables all functions of business to capture productivity growth potential from time-cost reductions, greater accuracy, increased visibility and control.
From sales to human resources to finance operations, management can look forward to shifting resources from repetitive manual practices to realizing strategic goals that create more value and deliver higher returns.
Experience how one single solution can improve accountability, accuracy and efficiency. Test drive Volve today free for 30 days.
