Improper tracking of expenses may lead to a loss of profit within the business, which is why companies should constantly come up with new ways on simplifying this task. An accurate management system is highly needed to ensure that company travels and other expenses are monitored and taken care of.
Automated solutions do not only make expense management more efficient, it also lessens the cost of operations. Choosing the right software will save you both time and money.
First thing, though. What is an expense report?
This should be a comprehensive compilation of documents that shows the total expenses incurred during a business trip or field assignment. Basically, some expenses are already charged prior to the trip, like airfare and hotel accommodation, since these are the first few things we need to settle before leaving. However, some expenses are usually charged to the employee, like the cost of his daily needs, particularly the unexpected expenditures that are urgent in nature. The employee would have to manually record all these activities, with paper receipts attached into every single cost incurred, because the management will validate the nature of each purchase before approving any reimbursement claim. This is the very reason why organizations are finally considering the use of automated solutions.
Here are seven major advantages that business owners will acquire when they consider the use of an automated expense management solution:
1. It speeds up the processing time, all the while reducing the cost.
Because automated systems are expected to automatically record the purchase the very moment it took place, it could save the employees a lot of time and effort. This way, the managers can also review and approve the claims as quick as possible. Gone are the days when employees have to manually collect paper receipts in order to create a report. Imagine the amount of time you used to spend on manually analyzing these expenses on spreadsheets – now you will have more time to focus on other tasks. If an employee was sent on a business trip, this means everything he purchased – be it an item or service – were done while he’s on the road. Employees usually have to wait until they arrive at their hotel to update their list. With an automated system, however, employees simply need to take a photo of the receipt and have it sent directly to the managers in charge. You can easily work on this task using a mobile phone, which means you can actually submit reports for reimbursement even before you get back to your hotel room.
According to a GBTA report, the average amount of time and cost needed in completing a report is also a driving factor for the actual amount to exceed $100 because of the following:
- Employees need an average of 20 minutes to complete a single report.
- It costs about $58, on average, to process each report.
- There is a 19% chance for every report to actually have errors, and can take another 18 minutes to correct them.
- It costs about $52 just to fix the errors
With an automated system, these factors are virtually eliminated since human errors are also significantly reduced. The lack of clear and comprehensive communications among stakeholders is a major reason why the process can be delayed. Most often, the reports just sit and wait in the inbox until the person responsible for it finally got the time to have them checked. This traditional system should open our eyes to the fact that, aside from the manual entry of claims, the approval process itself also takes a lot of time.
2. It helps in preventing expense fraud.
In the United States alone, employees submitting fraudulent expense reports are a problem that costs $2.8 billion. Believe it or not, exaggerated reports are more prevalent than you think. Organizations that still use spreadsheet to manage corporate expenses would have to spend a bunch of time manually verifying the legitimacy of every single purchase. They have to go through all these time-consuming troubles before approving a report. Automated systems would allow you to track duplicate (re-submitted) receipts, not to mention you won’t have to just rely on the employee’s own and usually inaccurate estimation. Fraud, nevertheless, may also take place unintentionally. Human errors – if they result to not being compliant with the corporate rules – may be considered a fraud. Providing an accurate data is an essential key to submitting a highly effective expense report and automated systems do not only remove the need to manually enter each claim, it also mitigates fraud itself. Those who plan to illegally tap the reports for their own benefits would think really hard before doing so.
3. It improves employee satisfaction; and satisfied employees are more productive.
Perhaps most business travelers would agree that gathering all the receipts needed to justify your expense report could be very daunting; some employees may even procrastinate as much as they could. By using an automated system, employees can finally focus on other important things, which give them more chances of becoming productive. When you create your financial report without cramming, you can come up with a high quality work; you also lessen the possibility of having your reports go through revisions. With the use of an accurate solution, you are also giving your employees a clearer insight on how to properly set their claims, reducing the chances of working outside the given framework, which of course is stressful on their part.
4. It improves policy compliance
Proper compliance is always on top of any business’ priorities; beyond everything else, non-compliance can damage your bottom line and ruin an organization’s reputation. Automated systems allow you to keep your policies updated. It is a requisite for any business to observe whether or not the requirements were being bypassed, as noncompliance even with a single policy – regardless of how this error was committed – may result in severe fines that the company will shoulder. It makes your policies clearer and more concise for everyone to avoid grave mistakes in submitting expenses, all the while making sure that your employees are aware of the purchase they can claim, and those they cannot.
5. It is mobile optimized, hence accessible, anytime and anywhere you go.
A lot of application-type system would allow you to manage your expenses on the move – it only requires clear photographs of official receipts, to be attached on the expense claim. Anyone would have to spend just a few minutes working on this, no matter where they are. Some organizations even consider providing their traveling employees a company-owned device that they can use in reporting real-time.
6. Get rid of paper trail; every step is digital.
And since everything is done online, or through mobile, the process becomes paperless. Just imagine the additional efficiency you may acquire if you no longer have to look for misplaced receipts or deal with the crumpled ones. With the use of cloud-based software, everything is quite neat and environment-friendly.
7. It streamlines reimbursements.
One of the most challenging part of corporate travels is the amount of time it usually takes to have it reimbursed – well, at least from an employee’s point of view. Yes, airline tickets and hotel accommodations were paid upfront by the organization, but the employees still have to shoulder the daily expenditures. Disappointment comes when reimbursement wasn’t processed on the expected timeframe.
Considering all the factors mentioned above, the bottom line is this: Spreadsheets may be versatile enough in gathering and managing all sorts of data, but they are no longer convenient when we talk about huge volumes of intricate input – which is definitely the cause of headache for many bookkeepers. Finding the perfect system for your business’s needs does not only simplify auditing, it will also help in tracking possible violations immediately.
In considering your option for the most appropriate expense management system, carefully assess the vendor’s track record. Many organizations offer different sort of management solutions, but we should weigh our options out and make sure they received good reviews from organizations that experienced their service first hand. While being user friendly is an important factor as well, your solution should be “business-ready” – something that can roll out accurate data consolidation, without being overwhelmed with the volume of statistics being put into it.
In finding the perfect expense solution, companies should consider operations that can run on handy devices such as mobile phones. Aside from its ability to record data, mobile functionality should be thoroughly considered because this is how employees are able to update their report, real time; this is how exactly they are able to be productive even while on the road. If you choose a solution that runs on mobile, it would lessen the time spent on creating report while avoiding questionable or misleading information.
Investing on a good expense solution may be quite pricey but it will benefit everyone in your organization – from the employees to the accountants, and literally everyone involved in the workflow. When you improve and refine the bottom line, it will boost employee productivity in general; by then, you can expect better overall statistics to follow.