Once you understand how expenses are collected and submitted in your company, it’s time to build a case for management to invest in a mobile solution. To build a business case, you can start by identifying common ways other companies save money and gain valuable productivity for your company’s travelers, managers, and accountants.
Improvements to the bottom line can be realized with a mobile solution that:
Increases Employee Productivity – Submitters will spend less time gathering receipts and creating expense reports once their receipts are digitized and can be combined as a virtual report in just a few moments. Managers and accountants spend less time approving and processing these reports, as they will be notified of items that need further attention, while others will be approved automatically. Management will also have instant access to real-time reports without requiring someone to assemble them manually. Finally, the filing, updating of transactions into financial systems, and the reimbursement process will all be automated.
Reduces Office Supply Costs – Manual processes require a great deal of collecting and organizing receipts, copying, scanning, and mailing. These result in increased paper costs, ink for printer/copiers, postage, and even overnight shipping. In some parts of the country there are huge costs attributed to filing these reports, as they may need to be retained for up to 7 years.
Improves Policy Compliance - According to the Aberdeen Group, manual expense processes have a 36% rate of compliance vs. over 90% compliance for automated systems. Lower compliance can be caused by employees not understanding the policy, expense duplication, data entry errors, or even fraud (some studies show that fraud accounts for as much as 5% of expenses). With a digitized expense policy, every expense is checked against policy and evaluated for duplication.
These three areas of savings can be translated into your business case in three ways. First, your evaluation can identify all annual costs for expense management, including the time spent by employees. Another option is to assess the average costs for all the steps to submit, approve, process, and file a report and then multiply this number by the number of reports processed. As a final alternative, you can look at some of the extensive industry studies out there, which have assessed the costs and time required by employees for managing expenses.
Below you can see a sample business case for a small company, which includes the items identified above. The model identifies total costs, annual costs, and per-expense-report costs. The final line shows potential savings of over $30 per expense report. This result compares closely with an Aberdeen Report that identified average overall cost per expense report as $41.12*. Automated expense systems bring the cost closer to $7. In today’s market, many mobile expense automation solutions range from $8 to $15 per user per month. If each user submits only one expense report per month, your returns will be high.
|Expense Automation Financial Analysis - Sample Business Case|
|Number of regular expense submitters (1 or more/month)||60||60|
|Number of annual expense reports submitted||2,000||2,000|
|Average expense report amount||$500||$500|
|Annual company expenses||$1,000,000||$1,000,000|
|Productivity Impact (time in minutes)||Current||Future|
|Average time for submitter to complete a single expense report||20||5|
|Average time for approver (s) to review an expense report||5||1|
|Average time for accountant to process and file a report||5||1|
|Average time to correct errors in a report||20||5|
|Percent of expense reports with an error||20%||1%|
|Average hourly cost per employee||$30||$30|
|Costs of the Process||Current||Future|
|Printing, copying, printer ink per expense report||$0.50||$0|
|Annual costs of printing/copying/ink for expense reporting||$1,000||$0|
|Postage or overnight costs per expense report||$1.50||$0|
|Annual costs of postage and overnight costs for expense reporting||$3,000||$0|
|Cost of storage per expense report (7 years retention)||$2,000||$0|
|Compliance to Expense Policy||Current||Future|
|Errors or duplication as a percentage of expenses incurred by report||20%||1%|
|Fraud as a percentage of expenses incurred by report||4%||1%|
|Annual labor costs to submit, process, file an expense report||$34,000||$7,050|
|Annual office costs for expense management||$6,000||$0|
|Annual cost of fraud and lack of compliance||$40,000||$10,000|
|Average overall cost per expense report*||$40.00||$8.53|
There’s no doubt that today’s mobile technology can help businesses simplify the expense reporting process and automate submission. We all use our mobile phones throughout the day. By using the same phone to submit, collect and manage expenses, organizations can easily increase productivity, improve compliance, and manage spend more proactively.
If you need help understanding your current expense processes, determining the value of automating your expense processes, or building a business case allows you to move forward with mobile expense management, download the complementary 3-Step Guide below.