The pandemic has been a reset button for businesses of all sizes. It has changed the nature of business travel, business expenses, and even day-to-day business operations.
Unfortunately, this means business owners and Finance teams need to start from scratch when dealing with employee expenses and reimbursements.
But do businesses start when it comes to financial improvements, you ask?
We’ve crafted this blog to answer this very question and more. We’ve also built a business use case for why your business must consider an expense software to sustain remote expense management effectively. Let’s get started!
Table of Contents
Main challenges of traditional expense management
- Spreadsheet-based expense reporting depends on the accuracy of human beings to enter the correct values into expense reports. Any incorrect values would translate into lengthy reimbursement cycles, back and forths with employees, additional costs to the business, and unhappy employees.
- Intentional or unintentional manual data entry errors also mean that Finance teams have to verify each expense report individually to ensure that no incorrect, duplicate, or fraudulent expenses get by. This can be quite a time-consuming and low-impact task for Finance teams to repeat regularly. This would eventually lead to fatigue and fraudulent claims slipping by.
- The onus of preventing expense fraud would fall on the shoulders of the Finance teams entirely. This can be quite a responsibility to take as any minor slip-up (which is quite likely to happen) could hurt the company’s finances in the long run.
- Business owners, leadership teams, and Finance teams have little to no control or visibility into the nuances of expense management within the company. This leads to bad business decisions not backed by data, expense fraud, and overall financial leaks within the system.
These challenges coupled with manual processes, deadlines, data entry errors, and back and forths can hamper your business, financial, and employee productivity. Thus, companies must consider leveraging automation-driven technology to take off the load from the Finance teams and stay afloat and thrive despite the testing times.
Why is an expense management software the answer to control employee business expenses?
1. Seamlessly automates the entire expense management process
While traditional expense management is error-prone and cumbersome, automation with an expense management software helps reduce time-consuming work for your Finance teams and employees. Additionally, the software turns any challenges faced in the traditional process into a one-click easy task.
This translates into:
- Seamless expense tracking and reporting for employees from any place, at any time, and by using any device.
- Accurate extraction of expense data from receipts using OCR technology to prevent manual data entry errors.
- Advanced insights into spending habits, patterns, top spenders, and top policy violators across the company.
- Access to secure cloud storage for easy retrieval of expense data during audits.
Pro-tip: Remember that keeping accurate records of expense data is critical to staying audit-ready. Failure to do so can lead to severe troubles with the IRS.
2. Enforces expense policies and ensures strict compliance
Companies often struggle to enforce policy compliance even with the most straightforward expense policies. We can attribute this to ineffective communication and weak policy enforcement. If left unnoticed, this leads to overspending in multiple areas and frequent expense policy violations.
An expense management software comes with a robust policy engine that enables Finance teams to create custom rules depending on the needs of the business. In addition, the software checks all reported expenses against company policies and informs employees of any violations right away.
This allows employees the liberty of not remembering policies and yet submitting compliant expense reports. In case an expense is flagged, the employee can provide reasons for the violation in the comments. The software documents these entries in a digital audit trail that the employee and key decision-makers can access. This not only eliminates back and forth with Finance teams but also ensures your business stays audit-ready, always.
3. Manages company-wide expenses
Every department within your company has different types, categories, and reasons behind business expenses. While employees do not need to worry about this, your Finance teams are often left clueless regarding the larger picture of business expenses.
An expense software addresses this problem with a real-time travel and expense dashboard that provides Finance teams with overall breakdowns based on set parameters with zero extra effort.
This empowers Finance teams to always stay in the loop when it comes to expense management, remote or not.
4. Insight into identifying cost-cutting strategies
An expense management software comes with the advanced data analytics feature that helps Finance teams draw logical conclusions from company-wide expense data. This could be across individuals, departments, budgets, cost centers, and more.
Finance teams can analyze these insights to find new opportunities to cut, save, or optimize operating costs to ensure no waste of resources and money.
For instance, if Finance teams notice that all traveling employees frequently use the same airline or chain of hotels for stay, they can negotiate with the vendor for better deals. Such measures can help Finance teams reduce operating expenses while also reevaluating budgets and overall spend.
5. Prevents fraudulent expenses from getting by
Pymnts reported that around 85% of employees across the U.S had admitted to lying on their expense reports. This would roughly mean that businesses would lose a total of $150 million every year on fraudulent expenses alone. This makes it a necessary evil to stop.
An expense management software prevents expense fraud, out-of-policy expenses, duplicate expenses, and more by seamlessly enforcing policy compliance and flagging non-compliant expenses while notifying Finance teams and employees. This ensures no fraud gets by with zero manual effort or intervention from Finance teams.
Conclusion
While manual spreadsheet-based expense reporting can be a tiresome process, an expense report software automates your entire pre-accounting process while also simplifying expense management from end-to-end.
Most successful businesses are now rapidly switching to an expense software to cope with remote expense management. It’s time your business does too!
