Truth be told, beyond employee payroll and perks, corporate travel & entertainment are the second-largest controllable expense for businesses. Wait, how do you manage your business expenses? Manually… paper records and Excel sheets; I mean, really, in this era of automatization? See, here’s a thing, If your employees travel more often for work, they’ll be required to submit expense reports to receive a reimbursement. It’s a long tiring process for the company and the employees to deal with and comply with travel policies. However, keeping employees’ expense reports is vital to handling your cash flow, as this allows you to reimburse correctly your employee’s expenses they make.
But have you ever thought a slight misstep in the process could lead to many expense reporting crises? It goes without saying human errors are pretty common in calculations, especially when it’s accounting; incorrect claims, unclear policies, and even fraud are common issues that you might face in business. And sadly, if you own a small business, it can be more destructive.
What is business expense management?
Before anything else, you need to understand the key components of expense management in business. However, every organization has its specific structure and policies, and expense management varies. Irrespective of that, the standard expense management components are mentioned below:
Filling in expense reports
The documents like tickets, hotel bills, and invoices are collected once a business expense is carried. The refund claim is submitted along with all receipts and invoices to the department manager.
Reviews & approvals
The reimbursement submission basically goes through two or more review and approval phases. The first review and approval are done by the line manager; based on approval limits set for different approvers. The request may sometimes be routed to the Director too. Later the claim is submitted to the finance division for review and approval, and finally, the accounting team sends the payment and completes the process.
The complete lifecycle of the expense request, from submission to payoff, is being recorded.
Commitment to companies’ policies and constraints is essential for all business processes. That’s why the data collected by the expense management is validated and is used for auditing intents.
Concocting the annual funding and planning for future expenses is done based on the data assembled by the expense management system.
- Let’s be frank; it is tedious: The entire process of managing expenses manually is time-consuming and eats up employees’ productive time.
- It could be fraudulent sometimes: There are high chances of inflated or duplicated claims through manual expense management systems. Policy and ordinance compliance insufficiency mostly arise when expense management is done manually.
- Inaccuracy: Of course, there are scopes of human errors; as humans run these manual processes. Sometimes the expense managing team might be overlooked, which can be troublesome.
- Influence negatively on primary work productivity: When it is manually done, much time is spent on reporting, claiming, and validating expenses. Therefore the time spent on project-related activities is pared and consequently affects productivity and efficiency.
Expense management is something through which businesses compensate employees for money spent on business-related matters. But, as observed, it makes up a lump of a company’s financial outflow; expenses shouldn’t be managed using paper records, crinkly invoice or receipts, and Excel sheets. Then how? Start “Automating” the expense management process!
Yes, you heard it right… automation indeed helps companies to manage expenses efficiently with accuracy and precision!
What is Expense Automation in business?
Finance teams across the globe have been known to help businesses to outperform with their strategies and foresight. Although their role has always been crucial, current financial changes in the marketplace have highlighted the demand for robust financial planning to bring sustainability to businesses. And this, as a result, gave rise to Expense automation, more like software for automated submission, approval, and recording of expense reports.
The expense management software aims to computerize all business-related expenses that take place in a company. Any scenario that entangles capturing, reporting, and reimbursing costs has the potential to be automated. Employees who pay out bills from their personal cards for the business get reimbursement for those expenses. Here are some common examples of those expenses:
- Education/training fee
- Transportation, lodging, and meals expense
- Equipment and supplies
- Phone & internet bills
- Postage & delivery bills
Employees may also incur “off-the-cuff” expenses— unexpected expenses arise while doing business. For example, a salesman offers overnight shipment to a client to crack the deal!
Benefits of automating small business expenses
An automated expense management approach undervalues perils in business, unlike the traditional expense management approach. Here are a few benefits of using expense management:
Benefits in favor of Employees:
It makes receipt tracking and reporting more efficient and easy! Most expense management software today in the business market offers effortless receipt tracking options to lessen the time and effort employees invest while reporting.
It also helps employees get payment reimbursements promptly! An automated expense management software makes it easy for employees to submit compliant expense reports in no time! Moreover, it eliminates the need for ongoing hither and thither between stakeholders to ensure convenient expense report submissions, clearances, and final reimbursements.