A tricky but necessary part of doing any business is managing expenses. First, all employees need to submit their expense reports to get their claims reimbursed. Managers then need to approve them and track how much money the company is spending on travel and expenses. They will also need to document everything for tax purposes and make sure the company claims all appropriate deductions.
But, how can a regular employee do this? Well, you can easily track your business expenses with cloud based software for expense management and stay organized. While larger companies extensively use expense tracking software and have successfully replaced spreadsheets, smaller businesses still rely on manual processes and systems.
Not using expense tracking solutions can lead to reimbursement delays, expense fraud, and tax penalties. We understand you may not be willing to make an investment all of a sudden. Luckily, you can try a personal expense tracker app free of cost and then make a decision. Here are some reasons why every company needs an expense management solution.
Why do companies need expense management software?
Travel and expenses are usually considered to be the organization’s second-highest indirect expense, with payroll being the first one. Audit, compliance, expense processing, and accounting management can make up to 23% of the total company cost. Expense tracking software lets you cut down the costs. Thus, most companies are making a shift towards it.
Here are a few reasons you need expense management software.
1. Get access to interactive dashboards
Having access to interactive dashboards makes it much easier to understand, analyze, and manage business expenses. With real-time information about your business in your hands, you will be able to establish future expense budgets and fulfill them easily.
2. Leverage the power of in-depth reports
When you know how to categorize your expenses, you will easily be able to highlight trends, understand how long it takes to approve expense reports, and eventually shorten the cycle. Besides, you will be able to cut down on irrelevant spending and strengthen your bottom line.
5 Reasons why you need to automate your expense management process
Here is how automating your expense management system can be ideal for your business.
1. Eliminates manual errors and paperwork
Manual expense reporting can leave your team with tons of receipts and spreadsheets. They will need to save them for recording their expenses, and the finance team will need to go through the paperwork to approve all the expense reports.
Going through so much paperwork can make the process error-prone. For example, even if your employees have submitted the perfect expense report, your finance team can make errors while transferring details to your accounting system.
Luckily, automation will completely remove the need for paperwork. For example, when you have expense tracking software, your employees will be able to capture receipts using their mobile phones and upload them in real-time.
Once they are done compiling their expenses and submitting the report, your finance team can work on it. This will save your employees 100s of hours, and you will be able to eliminate all errors. In addition, even if some errors manage to creep in, your finance manager will be able to trace them and fix them, which is next to impossible with paper records.
2. Improves policy compliance
Establishing travel expense policies while maintaining compliance can be challenging if you do not have an organized system in place. When multiple expenses start pouring in, your finance team will find it difficult to track costs and manage compliance if all the data has been entered in a spreadsheet.
This means they will need to validate all expenses manually, and there are chances something will be missed out. Then your finance team will need to consider policy violations and spend a huge amount on paying penalties.
Luckily, automating your expense management system as per your firm’s travel policies can help you detect and flag expenses that violate the travel policy. Moreover, the approvers will be notified of all policy violations as they occur. This simplifies the work for your finance team as they can check for expense compliance in real-time and reject expenses in just a few clicks.
Need To Record Your Business Expenses on the Go?
3. Prevents expense fraud
Manual expense receipts have an immense scope of fraud and theft. Submitting the same receipt twice and adding expenses in the wrong manner can drastically increase your expenses. With manual systems controlling, this process is complex, and it is all the more difficult to identify suspicious claims and deal with the concerned employee.
One way to put an end to expense frauds is to automate the whole process. Automation will help you eliminate duplicate entries and notify the submitter to merge or delete expenses.
Furthermore, with customized workflows, you will be able to maximize transparency and streamline your review process. Besides, it will let you expedite the reimbursement process.
4. Faster reimbursements
Poor workflows in which accountants and managers spend hours and hours reviewing manual expenses and then pass tasks from one person to another are causes of delayed reimbursements. Just imagine a team just returned from a business trip.
As the day ends, your finance team will have a pile of receipts on their desk. They sit down and check it and then verify it against the policy. If they skip a receipt, the employee reimbursement goes for a toss.
However, with expense management software, you will be able to customize the whole process. So, once an approver has given approval, the task will be passed on to the next approver, who will do their part. Once all approvals are done, the finance manager can review and then reimburse expenses in a few clicks.
5. Increases visibility
Real-time visibility is unachievable with manual expense management systems. Moreover, if you need to extract insights, you will need to spend hours extracting reports, and there is no guarantee they will be useful. Besides, this process can take up to a week and can eat a significant chunk of your time.
To make informed decisions, you will need to analyze expenses and view data as events happen. However, managing expenses manually is detrimental to data accuracy and limits your ability to track your company’s cash flow.
Most expense management systems provide a set of comprehensive reports on policy violations, trips, and reimbursements, and much more. With a few clicks, you can download all reports and have a look at your employees’ spending patterns.
Besides making quick decisions, these reports will let your finance teamwork in sync and find the best vendors for hotel chains and airline carriers. It will also let you negotiate better discounts and deals with them. This, in turn, will help you save costs and keep better track of your financial performance.
Well, if you still believe that expense management software is no for you. Let us tell you, processing one expense report can cost you $58 on average. So, if your firm has 5 employees away on business trips, you will need to spend $290 processing these reports. Yes, that is a whole lot of money to process reports. So, think about it and see if you want to have such expenses regularly.
Manual expense processes can be tedious for employees and finance teams alike. Besides, they are ridiculously expensive, and you will also need to account for erroneous reimbursements. Not to mention the hours spent in generating reports, processing them, rectifying errors, and finding out the fraudulent expenses.
Expense tracking software can address all your woes by capturing receipts and generating expense reports on the go. Not only do they help you stay informed about the approval status, but they also let you maintain policy compliance. All in all, the ideal expense management software can help you save hours of time and money while ensuring that your employees are happy and satisfied.
With digital transformation at an all-time high, all businesses use expense management software to manage business expenses and stay on top of their accounting needs. Willing to try out our cutting-edge billing and expense management software. Reach out to us at email@example.com or +1-805-491-9393.