6 Ways to Help You Level Up Your Expense Management
We, the people who have been in the tech/finance space for quite some time now, have decided to take the subject matter into our own hands and delve into the topic of efficiency and automation when it comes to expense management.
Now, we all know that dealing with expenses can be messy. It’s slow, it’s painful, and yet, it’s a process companies need to deal with it. What’s certain is that it deserves our time and attention. And this is where an automated expense workflow should come into the picture.
But first, let’s consider a simple explanation about what expense management really is:
Expense management refers to the process deployed by a business to submit, pay and audit employee-initiated expenses.
This basically boils down to expenses such as business travel, transport, team meals, and entertainment that need to be documented and reimbursed with ease.
Looking at the overall landscape, we know that there are many challenges faced by those who need to perform this task regularly.
For instance, if you have ever asked an accountant or sales rep how much time they spend tracking or submitting paper receipts for employee expenses, most will answer that it takes them a considerable amount of time to collate receipts, reconcile errors in expense reports and chase staff for receipts and incomplete expenses.
And what’s more, many finance departments also have to manually check for policy violations and browse directly through hard copies, making this a tedious task that requires time and effort.
Besides these challenges, there are other pain points that companies face in the expense space.
An insightful report created by PayStream Advisors offers an in-depth look at the trends and technologies in corporate travel and expense management (see chart below).
In the report, it’s shown that manual entry tops the list with 62% of respondents pinpointing this challenge, as well as lost expense reports with 24% of respondents highlighting this issue.
But fret not — there’s also some good news here; thanks to process automation, the way businesses record expenditures and generate expense reports looks like it’s finally evolving to a new level.
Want to know more about this topic? Read Accelerating Process Automation in the Digital Age
What’s certain is that with technology, the entire process can be streamlined — and an important step to becoming more efficient is to automate tasks like data entry into accounting and ERP systems and doing compliance checks which will result in a speedier workflow.
Then vs Now in Expense Management
Finance and accounting teams are known to do numerous reports relating to paying taxes, identifying revenue streams, tracking invoices and doing the overall balancing of the books.
An important aspect of their job is also to manage expenses submitted by staff, collating paper receipts, and making the necessary reimbursements by booking the payments manually into accounting systems.
Similarly, at the end of the month, employees spend hours manually collating receipts and raising expense claims.
This is how expense management has been done for years (and is still done in many companies of all sizes even today).
We know that change is not easy to implement, but all companies should aim to put efficiency at the forefront. So start by aiming to change the process.
In the Harvard Business Review article When You’ve Got to Cut Costs — Now, it’s highlighted how change can be implemented. The writers suggest to start with some questions:
- How have the business requirements evolved since you last fundamentally redesigned the process?
- Where do you use people to process forms or information repetitively, rather than do it electronically, with little or no human intervention?
- Could tasks be completed more efficiently if they were not tackled on a first-in, first-out basis?
These questions are crucial because they can really reshape the way tasks are carried out on a daily basis.
Today, when everyone uses technology to make work more efficient, an expense management software has the power to change the claims process by making the collating of paper receipts and the manual input of claims obsolete.
Sources have shown the benefits of automated expense management clearly (see chart below).
In this case, an expense automation solution could help companies reduce manual work considerably and make the reimbursement process more efficient and accurate. In return, this gives finance and accounting teams the time to focus on tasks that are most critical to the company’s bottom line.
On top of gaining efficiency and speed, companies can also improve their bottom-line profitability. This means that companies that charge Good and Services Tax (GST) or Value-Added Tax (VAT) can make claims on the GST or VAT they have paid if certain conditions are fulfilled. In this case, an expense management software can help companies seamlessly collate and document expenses that are eligible for tax claims.
For more information about this bottom line, also read: Key Benefits of Extracting Data from Receipts
So, if companies want to gain more efficiency, they can start by maximizing the right technology and focus on the following key elements to have a more streamlined process:
1. Automatic Extraction ✅
When you manage and book expenses, information from paper receipts need to be captured digitally. By automatically extracting all the relevant information, companies can be assured that the relevant information is available in a digital repository where they can access it anytime.
By using an expense management software, accountants can cut down the manual overhead in tracking and processing expenses.
The return comes in the form of multiple work hours saved, insights into spending and expense analytics, and employees and accountants that aren’t frustrated by the process.
From a business perspective, these are top winners for expense automation.
2. Making Claims Anytime, Anywhere 🔍
When you have the option to make your claims from anywhere at any time and still be sure that you’ll get reimbursed at the end of the month, there’s a high probability that you’ll make use of the automated tool in place.
By using an expense management tool, the accounting department (or whoever is in charge of your expense process) can view expenses as they are filed and approved, making the whole process transparent to anyone who needs to be kept in the loop.
Also, the company will also benefit from an auditable trail of the expenses which they can review later. These features can potentially help them gain insights into employee spending patterns.
3. Going Paperless 📋
Receipts, expense reports and invoices make up a big part of the financial ecosystem that many companies have to deal with.
As businesses are going paperless, automating this workflow and making the process digital can be a very good idea, especially because it helps you gain more efficiency. Besides, accountants or managers will no longer have to stress about receiving reports with crumpled bills attached to them.
4. Improving Accuracy 📈
Human errors are hard to avoid, but an automated expense management solution can increase precision.
Errors such as double billing, or missed receipts are common situations.
With the automatic extraction of information from receipts and seamless transfer of data between systems, accountants will have the confidence in the numbers they see.
5. Policy Checks 🔖
It’s a known fact that policy checks need to be addressed in the expense space, be it travel or beyond. So let’s translate this into how accountants or managers can perform better checks.
The idea is that each time an approver needs to check the company’s policy or browse through receipts to get to the bottom of a query adds even more delay to the overall process.
Maybe it could only 10 minutes per report, but if an approver has multiple reports to go through, it can quickly become a long, tedious task.
And what if an employee has a SGD 3,000 business trip report that needs approval and everything looks fine apart from a single line item? Perhaps we’re just talking about one meal that’s SGD 70 over the company’s policy’s limit.
In this case, will the approver just wave it through in order to get the employee reimbursed in time, or do they hold up the entire process by getting an explanation of why the particular expense was over the threshold?
The solution?What if an organization’s expense policy is automatically set up into the expense management solution during the implementation process, and any policy can be accommodated?
This enables companies to set notifications for business travellers before submission, if an expense is out-of-policy. Additionally, line item approval would allow approvers to submit expenses for reimbursement at the individual expense level, so that the whole process doesn’t need to be delayed for a single disputed transaction.
6. Seamless Integrations 🔀
Using two separate systems usually requires a lot of data entry. Accountants are usually left going back and forth between spreadsheets and expense reports. Teams are increasingly looking at tools that work better together as well — so they don’t have to interrupt the overall flow.
But a fully-automated expense management solution can integrate and seamlessly transfer data to an accounting system.
The system can integrate with the company’s bank accounts and accounting software (e.g. QuickBooks, Xero, MYOB, etc) to effortlessly transfer expense data into the company’s books, and enable a timely settlement of reimbursements for the employees.
This kind of workflow perfectly fits any business, providing them with coherent financial management.
Essentially, by having the option to seamlessly connect with other tools, your company will ensure that expense claims are always up to date.
Liked this article? We’ve also written a personal account of how we use our expense management solution to manage our own expenses. Give it a read!
