It has been observed that travel and expense management (T&E) is the second-largest operational cost to any company after payroll.
Managing expenses is inevitable for your finance department as well as employees.
There is a simple formula to solve all your expense management challenges while streamlining and adding a layer of accountability and visibility into every company expense.
Here we will help you understand the nuances of handling company expenses and how automation can resolve these challenges forever.
What exactly is Expense Management?
Previously, expense management was comprised of heaps of paper documents and Excel spreadsheets.
Tedious validation methods are the most common problems faced by the finance departments.
These traditional paper-based processes often leave employees wasting their valuable time completing tasks, which clearly are not part of their job description.
Is your organization still following traditional processes with spreadsheets?
Unfortunately, it can prove to be detrimental to your overall business health.
Hence, it is crucial to keep up with trends for scaling and developing your business.
If you are currently using an old method of managing expenses, then you need to understand why you must stop and embrace automation as soon as possible.
A Negative Impact on Paper-based Expense Management
Traditional modes of expense management might seem manageable for SMBs.
With only a handful of staff members, examining and handling expenditures may not be considered a huge issue.
However, problems occur when organizations are growing and increasing the number of staff members responsible for company expenses.
Whether it is sales, marketing, or for networking purposes, your staff invests their time and money into policy procedures.
At times, they may need to use their own money for business payments or supplies.
It then becomes crucial for your company to implement new-age T&E software – a solution that will help you and your staff in acquiring a seamless expense management experience.
To help you understand why traditional leveraging processes can leave a negative impact on your organizations’ costs, here is a complete list of disadvantages of utilizing conventional paper-based modes of handling your business expenses.
1. Higher chances for human error
Human intervention can cause errors and bias when manually entering data or while sifting through data for a specific expense claim.
It can ultimately result in businesses losing vast sums of money, over extended periods, some going unnoticed.
2. Lacks visibility into spending
Insufficient visibility into the data means you will miss information it is trying to show you, which may result in managers making ill-informed decisions that can hurt your organization.
Moreover, insight into spending trends can aid managers in generating effective expense policies, associate with suppliers for possible discounts, and more.
3. Loss of productivity
Many businesses run the risk of staff members and finance departments, spending more time on claiming, reporting, and examining expenses.
With your finance department and employees wasting effort and workforce by completing tasks that an automated software could do in seconds, losses the company time and money.
Manual processes include data entry and verification of supporting documents with their invoices for every expense claim.
It can cost your finance department vital productive hours.
According to a study conducted by the Global Business Travel Association (GBTA) discovered traditional modes of managing expenses could cost your business in several ways.
5. No productivity
Very often, conventional styles of expense management make the whole process tedious for finance departments as well as employees to manage.
Adding to this, variables like multi-country costs, various currencies, and expense policies.
Once an expense report is submitted, the approval lies on the employers to get completed.
The traditional methods require them to examine and verify the expense claims manually against the correct PO.
Late submissions, policy violations, and deadlines take up most of your employees their productive time, all of which could have been automated in the first place.
This entire procedure requires lots of time, thus, affecting the scale and development of the organization in the future.
6. Loss of money
Many employees would like the whole process to get completed so that they have time to focus on more pertinent tasks.
Because of tight deadlines, one of the most common aspects is when employees spend valuable time manually entering expense claims.
Another common phenomenon, which has been observed is that utilizing a solution will help your organization save time and money in the long-run.
This only increases the amount of work the accounting and finance departments need to complete.
Now they must create measures to overcome such tedious processes.
Manual mistakes and fraudulent activities in expense claims may seem like a small issue to deal with but can turn into one of your biggest roadblocks.
According to the Association of Certified Fraud Examiners (ACFE), occupational fraud can get broken down into three sections in governmental companies:
- 6%: statement fraud schemes accounting for losses around 316,000 dollars.
- 47%: corruption schemes accounting for losses around 410,000 dollars.
- 87%: asset misuse, thus accounting for losses of around 100,000 dollars.
These statistics indicate potential losses that are incurred by public sectors have lesser stringent rules when it comes to managing expense claims.
How Employees are Involved in Fraudulent Behavior
- Intentional errors when filing expense claims
- Submitting duplicate bills/invoices/receipts
- Submitting non-existent bills/invoices/receipts
- Intentionally exaggerated expense claims
These are the reasons why your business needs good expense policies to curb unnecessary spending at the root of the issue.
While following manual processes, accounting and finance departments need to validate each spend manually, thus leaving room for the approval of possible fraudulent claims.
According to the PayStream Advisors, organizations spend an average of 20.18 dollars to process an expense report.
Now, multiply that with the number of travelling employees, and you get the number of reports filed each month.
This indicates your company spends big money on unnecessary expenses, which could have been eliminated at the source.
But organizations that leverage a cloud-based travel and expense management system use less than half of that money to create and process expense reports.
Find a solution that validates, reports, and stores all business documents for less than half of the price of traditional methods.
Business enterprises following archaic modes of expense management have very little to no visibility into claimed expenses.
Expense management software automates these methods for you without any human intervention.
Automation Helps Increase Compliance
1. Transparency and real-time visibility
Organizations need to monitor where and when their money is getting used.
Many organizations lack critical insight into how their money is getting handled when it comes to managing expenses.
An automated T&E solution enables you to gain real-time visibility into recorded spend claims, and more. It adds a layer of transparency, which aids in a smooth functioning company.
2. Well documented transcripts
Monitoring each piece of information employees submit on their expense reports can be challenging.
Automation helps to ease these types of expense management challenges.
The solution will record every communication, which was made at the time of filing the expense report.
Everything is recorded in a single dashboard for managers to review.
Hence, this seamlessly provides you and your team with a complete digital trail, thus keeping you audit-ready every time.
Manual tasks, whether it’s verifying claimed expenses or locating past documents, can be challenging for any finance department to manage.
It requires tons of workforce, labour hours, and effort to collect and tracking down the correct supporting documents.
Searching through various expense submissions, validating and comparing each expense claim, then still needing to verify with the employee at the time of policy violations, are the tasks all finance departments deal with daily.
But, how can automation help to resolve this?
Well, with the help of an online expense management system, finance departments can now spend less time than needed to using traditional processes.
Workers can upload images of receipts directly into the system, and the solution will extract necessary information automatically.
Moreover, once all the receipts get submitted, employees can quickly generate an accurate expense report within minutes directly.
No need for managers to shuffle through emails for explanations on submitted expenses.
All supporting data is well-documented and can get easily accessed whenever needed.
Hence, cut down time-consuming tasks in half while handling every expense without error.
Employee satisfaction is another crucial element in gauging the health of an organization.
Happy employees mean enhanced efficiency and productivity.
On corporate trips, workers usually need to utilize their money for some of the trips.
Thus, reimbursing your employees on time with a seamless method is vital.
Automating expense management procedures aims at minimizing work for your employees, thereby showing you value their time and effort for the good of the company.
Leveraging an Automated Expense Management Software
- Minimizes processing costs– With an automated expense solution, approvers need to access and approve reports through a single centralized dashboard.
- Enhances policy compliance– By streamlining the complete expense management method, organizations can now expect a higher compliance rate.
- Reduced effort and manpower– Managing expenses was never part of everyone’s job description. So, it is crucial not to waste time, money, or effort into a solution. The solution aids the finance department to use their time more productively.
- Granular insight– With complete visibility and transparency, it is impossible to approve fraudulent activities.
- Keeps you audit-ready- When there are policy violations, staff members need to account for all the possible reasons for the violation. Accepting and rejecting expense claims later falls under the supervision of managers. Moreover, documented proof of all aspects aids your organization in remaining audit-ready at all times.
- Quicker reimbursements– The best employee expense software ensures the turnaround time for reimbursements gets minimized to less than half. Also, all expense claims are verified and flagged if violating an expense policy, thus assuring all your reimbursements are examined and validated before being processed.
- Visibility into spending pattern– Your finance department can leverage the power of analytics to acquire a full understanding of variables like frequently high categories of expenditures, suppliers, and spending habits.
Things to Consider When Selecting an Expense Management System
- Create a list of every challenge your business is currently facing with the expense management software you use now.
- Then assign a budget depending on the number of, your business stage, and more.
- Use free trials and request product demos to receive a complete understanding of the solutions you are considering.
- Search for one solution that best suits your business requirements and workflows.
- Ultimately, choose a modern expense solution, which seamlessly manages your woes related to your expense management.
The Bottom Line
Expense management procedures are a pain for many managers and their employees to handle manually.
In addition to possible incorrect reimbursements, archaic methods require you to invest more time in tracking reports, locating errors, and sifting through fraudulent expenses for hours at a time.
With the help of an automated travel and expense system such as SutiExpense, employees can easily capture expense reports with any smart device and store them securely, allowing you to monitor reports in a hassle-free way.
So, the time is right now for you to start implementing an expense solution to help you and your organization manage company costs more productively while also saving you time and money.
Also Read: Top 5 Accounting Tips For Your New Business