Staff expenses are in a bind when the time comes to get reimbursed. At times, they make an error, and this delays the rest of the process. Plus, an inefficient expense reporting process can cause difficulties. However, both sides of the reimbursement confusion can be resolved. But where to start?
One of the crucial signs that a corporate expense management solution really works is by viewing how quickly an expense takes to get reimbursed. This takes us back to the process. So, can organizations benefit from making a change in this part? Let us find out.
Understanding Web-based Expense Management
Travel and expense management solutions are mostly available as Software as a Service. Here, the supplier owns cloud-based expense solutions, and the customer accesses it through web-based applications.
An automated expense management system aims to ease the pain of managing expenses. It provides advantages such as expense analytics, policy enforcement, receipt management, and much more.
Suppliers have taken it a step beyond by deploying modern technologies and features into these systems to expand the process. Machine learning and artificial intelligence have enabled features such as receipt capture, excellent spending visibility, and process automation. It not only streamlines the method but also enhances staff morale and productivity.
Traditional Expense Management vs. Automated Expense Management
A conventional approach to expense reporting usually resembles the below:
- Workers enter all their expenses into an Excel sheet and order it accordingly as per expense report. Reporting in spreadsheets is cumbersome and slow. Then, they match all expenses with the personal/company credit cards or bank statements and review expenses so that they are compliant with the organization guidelines. Verifying expenses with business guidelines and rules cause extra confusion, as the employee may not be aware of such policies and, by mistake, enter non-compliant expenses into the expense report.
- Expense reports are submitted to managers for approval. The approver now validates each expense in order to ensure that it falls under business guidelines. They now need to halt their work and verify expenses from every staff to check if they are valid. Approvers may simply refuse to do so and approve the expense anyway. This is bad as it causes setbacks when the business is audited. Expenses rejected go back to the staff, and they need to start all over again. The back and forth between managers and staff make reimbursements time-consuming.
- The accounts team receives expense reports oncemanagers approve them. The payment gets finally processed and sent to the staff. But, when audits are conducted, it can result in discovering non-compliance costs getting reimbursed, causing them to chase down the staff member(s) to get the money back. It is a complete mess from end-to-end.
This entire process includes multiple steps and passes through multiple people before the staff receive reimbursement. In the worst-case scenario, the complete process can take several weeks or even months. Workers spend excessive time on generating expense reports, and approvers are stuck with verifying each expense for compliance, accountants face problems with continuously having to check with staff and approvers in order to simplify the accuracy of their approvals and reports.
An automated cloud-based expense management process resembles the below workflow:
- Workers capture receipts through a mobile application. upon taking the snapshot, the app extracts the receipt details automatically. It removes the burden of manual data entry. Once completed, the staff can compile costs to generate expense reports with a single click. Then, they can submit the report to their approver.
- Managers are sent the reports for approval. Rejection and approval take place in real-time, with company guidelines and rules built into the settings of the environment, and readily available for reference. This policy engine flags out-of-policy expenses automatically without human intervention. Unapproved/rejected expenses are sent back along with reasons.(an audit trail documents conversation around the flagged expense report).
- The HR/Accounting department can access each expense report that is rejected and approved. The approved reports get transferred into the ERP/accounting system. Then, they go for payment processing, and the staff gets reimbursement promptly.
Historically, staff would be required to gather physical receipts, generating a report covering all their expenses and later submit it for approval. Thanks to modern expense reporting solutions, workers no longer need to worry about their corporate expenses. For accounting and finance departments, expense reports are easily accessible based on hierarchy and configurable settings. Plus, they can validate each expense. This turns expense management into a single-click affair.
Does Business Size Matter While Selecting an Automated Expense Solution?
You might be thinking that this process is only helpful in large scale organizations. But this notion is false, as small organizations, as well as startups, can use online expense solutions.
According to a study by Hubspot, SaaS-based expense management solutions are increasingly being adopted by SMB’s for many reasons.
- Quick Deployment
Robust travel and expense systems can easily integrate with accounting systems, eliminating the hassle of integrations.
- Granular Insight into Spend
Online solutions are not just great for enhancing expense reporting but also function as an excellent expense tracking system. Organizations can gain complete visibility into expense details, spending trends, and so much more.
Subscription-based pricing makes it quite attractive to businesses. Also, they can acquire an ROI anytime between 6 to 12 months. Thus, it is an affordable option for companies of all types.
- Intuitive Interface
Expense solutions are easy to use by various users, such as the finance team, accountants, employees, and more. It makes the process of expense management simple for the stakeholders involved.
- Reevaluates the Expense Management Method
Small businesses may not have any clue on what it requires to enhance their current procedure. Leveraging an expense software enforces a resolution to that. It aids companies to streamline their expense management.
So, it is observed that more than 25% of small business organizations use a web-based expense system. The past two years have seen immense growth in startups as well as small businesses embracing expense software. Mid-sized organizations encourage their staff to travel for work, as 42% of the surveyed organizations use TEM systems.
A lot of time is spent on generating, approving, reimbursing, filing, and communicating the state of corporate costs. 55% of small organizations, 42% of mid-sized organizations, and 45% of large-scale businesses were affected by staff losing paper receipts or submitting expense reports without their receipts.
Major Areas to Enhance from Surveyed Organizations
- Need to minimize expense report processing cost
Small business enterprises that switched to cloud-based expense tracking software minimized or eliminated the use of Excel sheets for expense reporting.
- Lack of visibility into data leading to poor financial decisions
More than 85% of SMB’s wanted to switch to an expense automation solution in the upcoming months.
- Several Instances of Non-compliant Travel
Above 80% of businesses surveyed report having a written T&E policy in places.
- No Control over Spending
Expense report automation was considered as the second-highest priority among organizations while choosing an effective expense management solution, thus reinforcing the desire to streamline ineffective systems.
- Eliminating Hidden Expenses Leading to Lengthy Bills
Above one-third of small business enterprises surveyed acquired payback on investments in an automated expense software in less than six months.
Enhancing Expense Reporting with an Automated System
Therearemultiple areas where an enterprise can improve the expense reporting process. Especially, an automated T&E solution can drastically enhance many aspects of present expense reporting. Let’s check out a few of them.
How an Expense Management System Can Help Your Business
- Business Card Reconciliation
Many corporate card programs can be managed effectively under a single platform if the online expense software links credit card transactions with the respective employees. Automated notifications defines specific spend conditions for staff. In addition, these automated solutions also enable insight into card spend and integrating bank accounts directly.
- Managing Receipts
Expense reporting involves travelers taking pictures of their expense receipts and saving a digital copy of them on the system’s cloud storage. Receipt tracking is transparent and can be accessed in the employee’s receipt repository.
- Real-time Policy Enforcement
An expense tracking system gives real-time validation applied on expenses based on the configured policy needs. Approvals take place when expense claims occur. It significantly minimizes the reimbursement times. Plus, immediate actions can be taken on policy violations on the spot. It aids in encouraging internal policy compliance, while also securing funds for corporate-related needs.
- Approval Workflow Automation
Configured approvals route submitted expense reports to the appropriate personnel for quicker review. Multi-stage approval processes with a robust configurable hierarchy system are enabled for thorough validations. Plus, digital audit trails are enabled for unhindered expense tracking. This aids finance departments to stay carefree about staying compliant, as the solution does all the heavy lifting.
Existing accounting systems integrate into the expense management solution directly. Accountants need not have to go back and forth, validating each expense report. This ultimately plays a crucial role in enhancing the financial productivity of your business.
To Sum Up Reimbursements no longer remain a pain for your company. Plus, automated expense tracking solutions make receipt management a breeze.