Employees’ business expenses being the second-largest controllable cost. But the good news is that you can at least influence or regulate the cost because you have the authority to do so. This is unlike fixed costs such as rent or insurance. But the main problem businesses face is controlling and managing these expenses. For most businesses, they resort to using spreadsheets and paper forms instead of a proper expense management system.
But of course, with this kind of spend management, a lot could go wrong. This is because it involves a lot of manual work. It starts with the employees manually completing an expense claim and managers approving the expenses. It ends with the accounts department who process the expenses by keying in each expense item into the company’s finance system. After that the accountants can file away the claim and receipts.
Employees have to keep tabs on their paper receipts to record the expense. The finance team has to go through the paperwork to approve the expenses. All this paperwork from employees leads to a lot of wasted hours and there are higher chances of data entry errors.
At the same time, expense reports can drain a company’s resources.
Processing one expense report could cost an average of $58. What does this mean? If you have 11 employees working remotely or on business trips, you will spend nearly $650 processing the reports.
Despite all these challenges, you still have to conduct spend management to track employee spending and how you pay for the costs incurred.
What if there was a simpler and more effective way of managing your expenses? In this post, we’ll dive into how an expense management software will simplify your workload by:
Here are the six ways, an expense management system will simplify your work:
Typically, expense management would involve an employee filling out a spreadsheet expense report and keeping track of their expense receipts to record the expenses. The expense is sent to the manager for approval, then the managers forward them to the finance department for processing.
But you can simplify this process and improve employee productivity at the same time. With an expense management system, this process is automated. No more paperwork and manual processing that increases the chances of error.
Traditionally, receipts would have to be attached to the reports. Now employees can just capture the receipts with their smartphone and upload them to the expense platform.
With an expense management software the finance team can track the reports back to any time, which is normally difficult and time-consuming with paperwork.
With the automation of spend management, you get to:
Recommended reading: Keep Calm And Let Finance Automation Kick Out Chaos
To be frank, enforcing policy compliance can be difficult. Employees submitting out of policy expenses or submitting reports based on out of date guidelines. This forces the finance team to manually validate each expense against the expense policy.
It’s even harder to validate these expenses when employees submit a variety of expenses. It is time-consuming and you might end up paying some out of policy expenses that you aren’t supposed to pay.
With an expense management solution, you are automating policy compliance. You customize it according to your expense policy and the system notifies approvers of employee expenses that go against your expense policies.
The expense management software guides the employees on what they can spend and to be in line with the policies. This is because when they submit an expense out of the expense policy, the system would notify them in real-time.
Over time, they will comply with the policies in place and save the finance team the headache of manually validating the expenses. Concurrently, it improves your team’s productivity.
Recommended reading: Company Expense Policy Best Practices
Manual management of expenses makes it hard to get an accurate picture of your financial situation. Yes, your accounting team might be going through everything and submitting a report weekly. By the time they are submitting the expense report, new data has come up. It is hard for you to make critical decisions based on a report from a week ago while new data has not been processed.
You need current expense data to make decisions on cost-cutting. But recent data is not readily available because the finance team has not processed it yet.
Expense management software gives you access to real-time expense data. This enables you to know what exactly you are paying for. This gives you the time to make critical decisions because the data provided is accurate.
The quicker you get an accurate picture of the expenses, the quicker the reimbursement for employees.
An expense management system, will present you a dashboard that shows employee expense data. It provides you with easy-to-understand charts or graphs that give you an accurate picture of the financial situation.
You get to view how much you pay per employee and which category takes a considerable part of the employee expenses.
You can go further and generate extensive reports that provide data on what employees spend on the most. This allows you to identify patterns that you can use to make decisions.
Chances are, you haven’t experienced any fraudulent activities in expense management. But how sure are you there aren’t instances that have gone under the radar?
Because let’s face it, with manual processes, it’s easier for employees to try to feed in an expense twice or provide false expense data. It’s time-consuming to validate these expenses, so it’s possible the finance department couldn’t identify the false data.
In fact, according to research by the Association of Certified Fraud Examiners, expense reimbursement fraud is seen in 14% of the cases they analyzed.
Employees could be inflating business costs that prove to be difficult to identify manually.
One quick way you can protect your company off fraudulent expenses is by adopting an expense management system. By automating expense management, you get to identify inflated costs and duplicate entries. You may not have identified these when relying on a manual process.
When there is a system in place, you get visibility of all expenses and easily identify suspicious activities automatically.
You can clearly see when an employee spends way more than his/her colleagues in the same role on a business trip. This would be a red flag for you to follow up on.
Also, the system is difficult for employees to tamper with and claim false expenses.
Having employees submit receipts for reimbursement, managers approving each receipt and sending them over to the accounts department is time-consuming. The accounts department then still hast to verify each receipt, which lowers employee productivity.
The accounts team would have a stack of receipts to check if they comply with the company’s expense policies. In addition, the team has to check whether they have been approved by the right approvers.
And with the slightest wrong entry when processing these receipts would lead to inaccurate reimbursement which would prove costly to the company.
With an expense management system, this entire process is automated and employees get accurate and timely reimbursement. Employees submit receipts through their phones and approvers approve the expenses on their phones. The accounts team has access to all the expense data in one dashboard rather than multiple receipts with different expenses from various employees.
These systems flag errors when employees enter duplicate entries or when an approver hasn’t approved of an expense yet. This makes it easier to follow up and reimburse employees faster with accurate amounts.
Recommended reading: Guide to Managing Company Spend in the Remote Workplace
If you are processing expense reports manually, reimbursing employees is complicated, error prone and time-consuming.
To add to the complexity, your policies have to comply with the local state and international laws. Reimbursing employees in different countries can be even more complicated. This increases the chances of making an error or not complying with a state law. Keeping your expense policies in compliance with the law is important to stay on the right side and business operations continue smoothly.
You may have employees working remotely in different countries and you may have to comply with the different laws. This is difficult when managing expenses manually or using an old expense software.
For example, the state of Illinois in their Wage Payment and Collection Act included expense reimbursement rules. For instance an employee can submit a signed statement regarding an expense instead of a receipt. This is necessary if supporting documents are missing, lost or don’t exist. By not knowing the updated on this Act, your business might face being penalized by the state.
But by having a spend management solution these laws would be integrated in the system. This makes it easier for you, the employer, and employees to comply with both state law and company’s expense policies. Saving you the time of enforcing these policies and employees having to read all the rules manually and remember them.
And when the company is audited, an expense management software easily delivers electronic copies of receipts and reports. This would be a complicated process if it had to be done manually.
As companies adopt remote working, they have geographically dispersed workforce. The number of employees working from home continues to rise. Companies, where this model is an option, could see traditional expenses fading off with new expenses, such as an ergonomic home office chair, sprouting.
Therefore, you might need a reliable way for employees to submit expenses and receive reimbursement. You need this whether the employees are on business trips or just working from home.
Recommended reading: 10 Features to Look for in Expense Management Software
Volve has multi-language OCR capability. On top of that, Volve comes with a corporate card already integrated in the 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.