Expense Management: Why It’s Important and How to Improve It in Your Business
Don’t waste business resources and employee time with keeping track of expenses the old way.
Managing the cost of processing, paying, and auditing employee expenses can directly impact the bottom line. Between 8 and 10 per cent of the average company’s budget is dedicated to expenses so it makes sense to manage the cost efficiently. An automated system can make the process more time-efficient and accurate, easier to track, and give greater control over compliance with policy and legislation.
Employee expenses that are not managed closely can quickly get out of hand and impact the business’s bottom line. To manage expenses effectively, organisations need clear visibility into how much is being spent, by which employees, and on what items. Organisations that are using manual, privately developed solutions with little or no integration with external or internal data sets risk failing to notice if expenses are becoming unreasonable or unsustainable. Importantly, automating the expense process—rather than using a manual or paper-based system—lets organisations collect and analyse spending data. They can then identify spending patterns.
Many companies still use manual processes, including envelopes full of paper-based receipts and a spreadsheet. Internal travel and expense management (TEM) systems and processes often don’t allow for easy monitoring and measurement, causing data blind spots. Research shows 80 per cent of firms still rely on TEM data to be entered manually by employees. This is a problem because it can create inaccuracies and opportunities for fraud and reduce control over regulatory compliance.
Businesses that fail to automate the travel and expense management process are potentially missing out on significant business benefits including reduced costs and an improved bottom line.
However, many companies are reluctant to change to automated systems. Most commonly, businesses believe adopting a new system is expensive and involves up-front set-up fees and long-term financial commitments. This is not always the case. Cloud-based SaaS solutions let businesses control the scale and size of the investment to match their needs.
The time and resources needed to implement the solution is another primary concern for businesses considering expense automation. Many businesses don’t realise that solutions can be implemented in days, if not hours, and will reduce time spent on administration. Cloud-based solutions require little from the IT department in terms of management and maintenance. In addition, cloud-based mobile apps provide ongoing system upgrades and software updates at no extra cost.
The return on investment is also important to consider. Not only can automated systems help companies reclaim as much GST as they possibly can, but can also reduce employee frustration. Employees often have to put in a huge amount of effort to manually lodge their invoice claims, and then finance teams need to individually review and accept approvals. These can be tedious and time-consuming activities, can distract employees from doing important work, and, if reimbursements are delayed, morale can be impacted. By streamlining the administrative process, employees can focus on core duties and achieving business outputs.
Furthermore, automated systems can help perform business audits that stop expense claim mistakes and fraud as they happen, rather than recovering losses after they have occurred. Automated expense management provides timely, accurate visibility into employee spending across the organisation and eliminates the need to track and manage paper receipts. It automatically adds corporate card and travel purchases to expense claims and detects and prevents fraud by proactively enforcing corporate spending policies and flagging non-compliant transactions.
Without objective, realtime audits, businesses can go for months overlooking issues such as fraud, un-met regulatory requirements, under-claimed tax, and compliance penalties.
These issues can create high costs and headaches for businesses. Businesses need to thoroughly check expenses to ensure the business complies with regulations and make sure employees aren’t spending too much or buying non-work related items.
Expense management technology can help with business audits by providing visibility into what funds are coming in and out of the business. Using technology to complete a thorough audit can drive further bottom line savings by ensuring the business claims all compliant tax amounts. It can also provide peace of mind by protecting the business from tax over-claim and potential compliance penalties. See the six key benefits of automated travel and expense management systems in the chart below.
Six Key Benefits of Automated Travel and Expense Management Systems
1. A strong platform means one user experience, one set of reconciled data, and one source of truth for analytics and reporting.
2. Automated systems can be configured to align with company rules and policies, including preferred hotels, airlines, and maximum spending limits according to the type of travel.
3. The system can be configured with data specific to each organisation, for example, employee IDs, project codes, and customer accounts.
4. There is potential to connect with CRM systems to understand the cost-of-sale per customer.
5. They offer a real-time view of how each project is performing according to budget.
6. Organisations can better understand where employees are, and how to maximise employee safety, satisfaction and productivity.
Employees are accustomed to managing almost every aspect of their lives using their mobile device. Using smartphones saves significant amounts of time and increases efficiency.
Mobile technology is also a great way to make employees more productive. The less time they have to spend searching for data or dealing with process, the more time they can spend directly improving a company’s bottom line. Subject to an organisation’s security policy, a smartphone is always on, always connected, and full of useful apps that are constantly being updated.
By the end of 2017 more than 50 per cent of employees will expect to interact with their company on their smartphone. Companies must provide mobile options for expense management.
Automated systems let employees take photos of their receipts on their smartphones and then automatically populate expense claims. The systems can integrate between travel, expense, CRM, human resources, and enterprise resource planning (ERP) data to give real-time insight into company budget and spend.
This makes it easier for managers to approve expense claims and it also brings to light any discrepancies or unauthorised expenditure much faster than a manual system could ever do.
Businesses should consider adopting an automated expense management
solution with mobile access to improve their bottom line and employee satisfaction, ensure regulatory compliance and reduce fraud.