The tasks of CFOs and sales managers usually revolve around handling financials and producing business reports. They’re also expected to devise ways to improve the efficiency of using company resources which includes getting the travel and expense management system in order.
Long live the days when ledgers and spreadsheets as large as parking spaces rule the accounting world. Today, we have powerful computers to do the work for us, giving us instant access to complex information in a matter of seconds. Businesses have adopted this new standard and are quickly switching to better and more efficient platforms to handle expenses and other financial matters.
There are many types of expense management solutions businesses employ for their daily operations. Each method has its own benefits and limitations acclimated to your business needs.
- Paper-based forms
- Spreadsheets made from Excel
- Cloud-based systems
- ERP solutions
A lot of companies in North America are already using travel and expense management (TEM) systems, although there’s still a number who prefer to do things manually. Most of the time, the decision to shift into a better expense management system depends on the company size.
As companies grow bigger, they need a more advanced expense management solution that can rapidly crunch large amounts of data. A business with just 10 employees can have its travel and expense spend done on a spreadsheet. It would be impractical and expensive to buy a TEM system at this point. On the contrary, a company with more than a thousand employees need a more complex system due to the fact that automated expense systems are scalable and have better capabilities in handling a larger number of employees.
Filing of travel expenses is one of the processes that can benefit from using an expense management solution. Traveling is an integral part of a large number of businesses, especially those that deal with insurance, consulting, and distribution.
Travel expenses eat a significant portion of the company’s budget which is why it’s critical to get detailed information on the travel & expense records of employees.
Travel and expense management affects more than just the budgeting decisions of an organization. The data gathered from this process can also be used for projecting cash flows, tracking audit trails, and discerning spend patterns. More importantly, it addresses the basic problems managers and CFOs face every day in the office.
Facing Challenges with the Help of an Automated Expense System
It’s that time of the month again when you have to review claims on travel expenses. You have your aspirin prepared for a possible headache caused by a variety of reasons, ranging from an employee not knowing what to file, to inefficient expense management processes enforced by the organization.
Listed below are a few of the dilemmas managers usually face when it’s time for filing travel reimbursements. Also included are the ways travel and expense management solution can help resolve these issues.
1. Employees don’t know what to file
Your company surely has policies in place for what can be considered reimbursable travel expenses. Oftentimes, though, employees don’t know about the rules and they’ll just submit what they consider eligible for reimbursement on their terms. This can be troublesome to countercheck, especially if there are a thousand employees filing for travel expenses. There will be numerous times where you’ll have to manually double-check whether their claim is valid or not.
In some cases, meal and hotel incidentals are included in the hotel bills submitted for reimbursement. Some companies don’t allow this because they either want to categorize costs appropriately or avoid double paying for meals. If your company doesn’t cover hotel incidentals, you’ll have trouble with employees who include these kinds of expenditures in their reimbursement requests.
A mobile TEM can include a feature where employees can easily pull up the reimbursement policies of your company regarding travel expenses. This way, they’ll have no reason to file incomplete and invalid requests. Additionally, some TEM systems will review the expenses filed that don’t adhere to the expense policy and flag them as non-compliant.
Your company may also be partnered with a hotel, restaurant, or travel agency where you get additional discounts for using their services. It’ll be easier to track these kinds of deals when you have a TEM application that categorizes these items and takes them into account.
2. Lack of visibility on vital information
Do you know how much on average employees spend on a trip? How about how much they spend on food? Where do they usually go? Where do they often stay? How much time do they spend traveling?
If your company’s expense management is processed manually, extracting these kinds of data may be time-consuming, if not impossible. With spreadsheets, this can be done faster but you still have to create formulas and manually filter the data. Unfortunately, you can only expect a limited amount of information to be available on reports since they won’t be able to display complex data.
Spreadsheets and similar applications that provide only basic functionalities limit the way you view your data. You can see expenses in a limited timeframe, preventing you from seeing the bigger picture presented by trends and changes in spend patterns.
With an automated expense system like PixExpense, you’ll be able to produce a variety of reports highlighting important metrics that can affect business decisions. This will give you a better overview of how travel expenses affect your company’s finances.
A TEM system can also help you identify the factors that affect travel expenses. Are fuel price hikes and inflation rates the reasons why the company is spending more than last year? Or maybe employees are just maximizing the allocated budget for traveling?
With a robust TEM system, you can investigate these aspects that will help you devise ways to maximize your finances.
3. Inefficient filing method
Printouts become harder to read as time passes and ink fades. This is especially true for paper receipts, making it almost impossible to recover data in case you need to review certain information. Sifting through piles of paper is also not the most viable option as it presents an unnecessary waste of time.
Maybe you’re using email to receive requests, which is just a little bit better than keeping printouts. This allows you to store digital copies of receipts and employee requests but this will be harder to organize in the long run. Besides, with this system, you still have to manually input the information into a separate database used by your accounting system.
Both these methods hamper employee productivity. Having a mobile expense management solution like PixExpense can resolve these issues.
You can now avoid mounds of paper trails since employees can just quickly take a snapshot of their receipts and have the system automatically attach it to their reimbursement requests. This saves people the trouble of keeping the actual paper receipt. No more misplaced documents and reading faded ink.
Some TEM solutions have the ability to rapidly retrieve only the relevant details on the receipt image (such as date, merchant, and amount) and digitize them. This eliminates the need to read and retype the details on the receipt so that it can be saved into the database.
4. Long approval process
How long does it take for your company to process reimbursements? Long approval queues cause delays. At times, lengthy approvals may even be unnecessary.
Travel expenses filed with incomplete information also causes delays since managers have to follow-up on employees to submit the missing details on their requests.
Having employees wait for weeks or even months to get reimbursed has a negative impact on their motivation to engage in business trips. If this situation happens consistently, it may dampen the morale of your employees to work as they see a discord between the company’s travel objectives and its capability to pay for travel expenses.
One way to resolve this issue is by streamlining approval bottlenecks. Hold-ups sometimes happen when the approving entity is on leave or in a meeting. These situations leave them little time to attend to verifying reimbursement requests.
When you have an expense management system with mobile capabilities, you can handle approvals anywhere you want. You don’t have to open your laptop or go to the office and access your workstation just to approve requests. Additionally, if the company’s expense policies are digitized, the system can flag any problems with the expenses submitted for the approving manager.
Many expense solutions nowadays require less manual entry. This can save time and reduce incorrect data entries. Automatic approval for bulk requests can also be used to reduce hands-on interference on your part.
Numbers Don’t Lie
The move toward automating travel expense management is nothing new. Through the years, more and more companies are embracing the power of technology to streamline their business processes.
A survey conducted by PayStream Advisors show that majority of the participants they interviewed belong to organizations who utilize the advantages of having a dedicated expense management solution.
Fig. 1. Employee expense report submission methods (Source: PayStream Advisors)
Having a powerful travel and expense management solution can improve some vital business processes. According to a recent research, businesses who have adopted an automated expense management system are reaping more benefits than they expected. Actual benefits exceed expected benefits by up to 3:1 in areas such as faster reimbursement for employees, insight into travel and entertainment spend, and frequency of expense reports filed. The TEM system also performed better than projected in dropping the use of spreadsheets, eliminating manual data entry, and reducing time spent in creating and approving expense reports.
Those kind of improvements demonstrate how beneficial it is to have a robust TEM solution for your business. It can provide you with control and visibility over your company’s travel expenses.
So, why do automated expense systems make CFO’s and Sales Managers’ jobs easier?
Travel and expense management shouldn’t be an onerous task. It only becomes tricky to practice when you’re using an outdated model to process data. If you can identify the weakness in your system, the processing time can be made faster and more efficient.
By using an automated expense system, you can quickly resolve the issues you face in processing travel expenses. Expense solutions make it more convenient for employees to file for reimbursements and for CFOs and managers to manage the requests and generate insightful reports.
At Pixmettle, we develop and continue to innovate automated expense systems that make the lives of CFOs and Sales Managers easier. Get in touch with us if you want to know more about our mobile solution.