Manual expense report control is one of the most tedious and time consuming expense management tasks your finance team have to deal with. Yet, it is a task that can have serious fiscal and financial repercussions if done wrong.
For many companies, travel expenses are the second largest cost after payroll, pandemic notwithstanding. Thus, it is important to get your numbers right to ensure both your company’s financial stability and your employees' happiness.
Below are five ways to improve your control process with expense automation.
Many companies make the mistake of writing long, complex expense policies. They try to encompass every possible scenario, at the cost of being understandable. This irritates both the travellers and the controllers in charge of ensuring policies are being followed.
By making policies too complex, you are giving employees a reason to not read them and, therefore, not apply them. This often leads to overspending and disgruntled employees when they find out that their expenses won’t be reimbursed in full for not following the rules.
Whereas, by ensuring your expense policies are clear and easy to follow, you help employees submit compliant expenses. And with automated policy checks, you catch any mistakes before they end up on your G/L accounts. This means your financial controllers spend less time checking compliant expenses, and focus instead on discrepancies and higher value work.
Increased expense report compliance is beneficial to everyone. Employees know they will be reimbursed, controllers spend less time checking expenses and the organisation spends less money on expenses.
With manual expense management, employees and controllers may wait until the last moment to handle expenses. Employees rummage through pockets and laptop bags to find elusive receipts from three weeks ago. Controllers are then assailed by a mountain of last minute, hard to decipher expenses.
Automated expense management allows your employees to submit receipts with their phones via a mobile app as soon as they've paid. This makes for a steady and easier to manage stream of expenses to control. In turn, reimbursements are faster (= happier employees) and controls more accurate (= healthier organisations).
Paper receipts are the bane of any travellers' life. They get crumpled, lost, damaged or forgotten in a jacket pocket. They also become unreadable, frustrating controllers and making for incomplete tax records.
In addition to hard-to-read receipts, your controllers are faced with the sheer number of expense reports coming in. As with any time-consuming, repetitive task, this can lead to errors in the reports - and your records. In turn, you become exposed both to the risk of overspending and to fiscal risks in case of a tax audit.
Easily improve expense control by improving the way employees submit expenses and by automating control.
Employees with access to a mobile expense app that lets them scan and submit expenses in real-time are less likely to let them pile up (and become unreadable!). With the app, employees scan their receipts and OCR accurately and automatically extracts the data. Matching this data to a payment card transaction further ensures compliance.
Knowing that the data is compliant helps you to set automatic thresholds. This allows your controllers to check only expenses which fit certain criteria (excess spend, category, etc.) or present discrepancies.
With manual expense management, the trail between controllers and travellers can become tangled when expenses require corrections or explanations. The controller may roll back an expense to the approving manager. They must in turn ask their employee to correct their report. Depending on the organisation’s structure, this can be a lengthy process, leading to delays in your accounting.
Expense automation simplifies your expense management process. Automated solutions spot and flag errors and suspicious activity before submission. Employees can thus make corrections in real time, improving the quality of the data submitted. And if anything requires a correction or explanation, controllers can simply roll back the expense with a message to the employee asking for clarification or edits. The path is clear and direct, and requires only a few clicks on either end.
With manual expense management, direct and indirect costs are hard to estimate. How many mistakes have been missed in reports? How many extra kilometers added to mileages? And, harder to gauge, how much excess time are your employees spending on expense management?
Without knowing how much time and money expenses are costing you, it’s hard to know where to make improvements.
Expense process automation gives you more visibility, increases control and improves predictability. This allows you to scale your expense process, and your business. And allows your controllers to focus on higher added value tasks rather than basic expense control.
Convenient, detailed reporting tools enable you to check different metrics and improve on them. After identifying your highest spend categories or business units, you can make strategic decisions regarding your budget.