How Better Expense Management Drives Better Decisions
Expense management software helps your company make better decisions. It can help elevate business operations by reducing company costs, increasing productivity, and saving time for employees and managers.
Expense management is a business process that pays and audits employee-initiated expenses. On behalf of the company, employees often make business trips, purchase products, and services. Having an expense management platform does not only help you to track employee spending, but it also enables you to reimburse the costs incurred.
In this guide, you will learn:
- Why is expense management important?
- Disadvantages of a paper receipt system
- Disadvantages of spreadsheets
- How to make expense management better
- The 11 benefits of expense management software
- What to consider when choosing an expense management system
Why is Expense Management Important?
When the receipts pile on, tracking expenses manually becomes prone to human error. Alternatively, expense management software automates and streamlines payments and reimbursement across your company.
For example, some companies overlook the costs associated with employee business travels. Without a proper expense tracking system, businesses can quickly deplete their resources and reputation in overpaying or underpaying employees. On top of that, employees waiting for reimbursements may feel stressed as a result.
The same applies to on-time payments. Having overdue bills creates a negative image of your business as late payments break your company’s reputation and trustworthiness. Businesses may also face penalties they don’t want to encounter. Issues associated with finances put greater pressure on your accounting and finance teams as well.
An accurate expense management system that fits your company helps you effectively pay your bills on time. It automates the employee expense reimbursement process. Handling expenses might take too much time, but an expense management platform saves you time and prevents drastic errors.
Disadvantages of a Paper Receipt System
The paper tracking receipt system is an outdated way of tracking expenses. It is also one of the biggest information security risks for businesses. It is burdensome for employees as they need to hand in all the receipts, but some may be lost, misplaced, or damaged.
Collecting receipts can be messy as employees must worry about physically organizing the documents. Additionally, it eats a lot of space in the accountants’ place or office storage.
Fortuitous events could happen like fires or any natural disaster as well. Once the files are all gone, there is no way of getting information back.
Overall, the paper receipt system is complicated, slow, and inefficient. It creates an unproductive process as it slows the communication of the accountants towards the employees, suppliers, and clients.
Disadvantages of Spreadsheets
Many companies use a spreadsheet to track expenses since they are economical and easy to use. However, this is not a practical solution in managing company expenses. As more people use the spreadsheet at the same time, employees end up spending too much time manually altering data. Your company also runs the risk of human error that can be costly to your business.
The use of spreadsheets has other disadvantages as well. The most concerning issue is the fraudulent manipulation in companies’ files due to a lack of control. Unprotected spreadsheets are easy to share with external users, which compromises the confidentiality of your data.
An automated expense management and tracking system can streamline your process and deliver accurate reports and analyses. Importantly, all the harmful disadvantages mentioned above can be avoided.
How To Make Expense Management Better
Managing your expenses is crucial for future savings, financial planning, and avoiding financial trouble. Every business should have expense processing software for better spending management. Doing this will help organize any financial expenses, making it easier for your company to spot fraud and errors.
Here are some actions to consider improving your expense management system:
- Make sure to create a policy that is equitable and enforceable by all
- Make expenses as easy to track as possible
- Have an easy way to submit receipts and expense reports
- Regularly audit your process for accurate expense tracking
- Utilize software that supports the digital collection, submission, and review of receipts
Benefits of Expense Management Software
The following explains why you should use a dedicated expense management solution and how it will improve your 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
- Customized and better reports
- Accessible dashboards
- Tax compliance
1. Automatically Populate Expense Reports
Manual expense report management is both expensive and time-consuming. But with a dedicated expense management system, you can save a lot of time. It takes only minutes to complete one report compared to a manual input, which may take hours to complete. You can now reimburse employee expenditures without delays.
With the use of a good expense management platform, you will gain better insights into how much individual employees spend. At the same time, you can now easily point out unusual high expenses that you may have to address.
2. Manage Unexpected Expenses with Virtual Cards
Carrying cash and traditional cards in hand exposes employees to the risk of losing them or worse, theft. It is more advisable for an employee to use virtual cards than carry cash and traditional cards when on business trips.
Advanced expense management platforms come with virtual cards that eliminate all the manual processes of the use of traditional cards. Since virtual cards exist completely online, this is a smart solution to cover employees’ expenses when they are away. It offers more convenience, less risk, transparency, and more efficiency.
Recommended reading: Virtual Cards: Protection, Prevention and Payments
3. Empower Employees with Monthly Budgets
In some cases, employees cover their expenses and request reimbursement from their employers. This can be frustrating for employees if their reimbursement does not get approved in time. A good expense management system can eliminate this problem.
You can assign a limited budget to everyone in your company so that nobody spends more than what is allocated to them. This allows employees to plan their spending activities.
4. Complement Your Existing Accounting Software
Expense management systems match the present and future needs of your organization. You can integrate this system into the existing accounting software of your company. As your company grows, an expense management solution can keep up with the expansion.
Furthermore, managers can access accounting reports from any time and anywhere. They can provide input even if they are not present at the office.
5. Expedite Workflows With An Expense Management System
An expense management system is the key to wise spending. Using this system will enhance your business expense management, reduce costly errors, and tack all costs.
Aside from that, it encourages employees to work productively. Having an updated expense management system eliminates wasting time mindlessly inputting numbers. Employees can invest more time performing productive tasks that contribute to business growth.
6. No Financial Strain on Employees and Better Accounting
Financial stress has been known to result in less productivity and negative behaviors from employees. In return, this impacts your organization if employees are not performing their best.
An expense management software coupled with virtual cards can solve this problem. It takes the financial burden off your employees. It also eliminates the manual process that makes it hard for finance managers to authorize and monitor reimbursements. The process is hassle-free for everyone involved; voiding employee minds of stress associated with delayed repayments.
Recommended reading: Guide to Managing Company Spend in the Remote Workplace
7. Increase Controls
It ensures that all the expenses are in line with corporate policies. Additionally, managers can collect sufficient data on these expenses while keeping administrative and processing costs at a low level. More proactive management of your expenses means staying on top of your cash flow.
Updated and automated expense management process reduces the burden of managing and controlling employee spending. Automating your expense reporting increases your control of all transactions.
8. Provide Timely and Accurate Data
Expense management system software helps reduce the time and effort involved in managing expenses. The time-consuming part of expense management is the manual input of data and supervision over these expenses.
Automated applications save more time as they can automatically capture card feeds and input them into the expense report. Employees can also easily capture their receipts and attach them to the appropriate claims using their mobile devices.
This swift recording process allows managers to quickly check and review for its approval. Instead of monitoring a manual input, managers can shift their focus to more important tasks like analyzing and interpreting expense reports.
Online or SaaS expense management tools ensure accurate data because some come equipped with features like receipt scanning. This detects whether the receipt already has a match record in the system.
9. Customized and Better Reports
Suitable software can provide real-time analytics and reporting. It can issue details about who is spending, the amount, and under which department.
This allows you to capture the full picture of your business spending. You can also use it to identify areas where you can tighten budgeting controls and improve the bottom line.
10. Accessible Dashboards
Using a spreadsheet and paper system is a time-consuming process and is prone to plenty of errors. The process of this system enables everyone to enter data on the same sheet which lacks accuracy as they might allocate it incorrectly. It is also hard to navigate the platform and retrieve the information you need when using a manual system.
On the other hand, expense management software gives everyone on the team access to data wherever they are. From information on where employees purchased goods to the amount of money spent, everything is easily accessible on expense management software.
11. Tax Compliance
Tax compliance is one of the most critical aspect of businesses. It is essential to ensure proper declaration of tax deductions to avoid disallowances that could lead you to an audit or greater penalties.
Using expense management software helps your company stay in compliance with local, state, and federal tax agencies.
It ensures having accurate records and maintenance of expenses, to mitigate the risk of an audit. When the authorities require you to prove your expenses, you can easily access and present the information from the software.
What to Consider When Choosing an Expense Management System
Nowadays, many expense management systems exist in the market. But not all of them are created equally. You must make sure that the application offers functions that align with company needs and a high level of post-sale support.
Choosing the right expense management tool for your company could eliminate problems and struggles that we’re currently experiencing.
Common functionalities to look for and compare among vendors include:
- Document management to create audit trails
- Easy, customizable approval processes
- Customizable expense policies, with real-time checks for employee compliance
- Mobile accessibility on many kinds of devices
- Analytics and reporting
- Integration with other software systems
Request demonstrations and conduct thorough research before settling on expense management software. You can also look at other companies that use the expense management system you’re interested in. Don’t be afraid to reach out and ask for their opinion on the software.
Recommended reading: How To Choose Your Expense Management Software
Conclusion
Use expense management software that will give you quality report processing. Be wise in selecting and choosing the appropriate software that will serve all the needs of your business, especially with managing your expenses. This helps you come up with effective solutions that ensure your business finances are all in order.
We are living in a modern world where change is constant. This is also the period where technology is integrated throughout almost everything we do. So why can’t we use this technological advancement to properly manage our business?
This surely helps an organization move from stagnancy to growth. We all need to challenge ourselves and incorporate innovations for us to stay on top of our businesses.
About Volve’s Spend Management Solution
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.
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.
