6 Reasons Why You Should Automate Your Manual Expense Management Processes
Here's how automating your manual expense system can be beneficial for your business
Photo Credit :
If your firm manages travel expenses manually, here’s an eye-opener for you: a study conducted by the Global Business Travel Association (GBTA) found that processing one expense report costs $58 on an average. Let's say that your firm has 10 employees away on business trips, who will later submit 10 expense reports. Statistically, you would have to spend $580 to process these reports.
The $580 spent on processing reports could be put to better use by investing in an expense management system that automates your expense processes. Automation means no more paper or spreadsheets, reduced admin work, and faster processing. Also, an expense management system can improve your firm's compliance rates and remove fraudulent expenses from the picture.
Here's how automating your manual expense system can be beneficial for your business:
Eliminates paperwork and error-ridden reports
Manual expense reporting leaves your travellers and travel team bogged down with heaps of receipts and spreadsheets. Your employees have to save their paper receipts to record their expenses, while your finance team goes through a lot of paperwork to verify and approve expense reports. All this sifting through paperwork makes the process error-prone. For example, even if your employees submit perfect expense reports, your finance team can still mess up while manually transferring the details from the spreadsheet to the accounting system.
Automation removes the need for paperwork. When you have an expense management system in place, your employees can capture the receipts using their mobile phones and upload them directly to the expense application. Once they compile the expenses and submit the report, your finance team can take it from there. This saves your employees a lot of time and eliminates sources of error. Even if errors occur, your finance manager can trace them back to their origin, which is often impossible with paper records.
Improves policy compliance rates
Enforcing travel expense policies and maintaining compliance is quite daunting when you don't have a proper system in place. When a multitude of expenses start pouring in, it’s difficult for the finance team to track and ensure compliance for transactions being entered into a spreadsheet. They would have to validate every single expense against the travel expense policy manually. Manual expense processing can also mean that out-of-policy expenses slip through the cracks and your finance team ends up reimbursing your employees for policy violations.
You can customize your expense management system in accordance with your firm’s travel policies. The system is programmed to automatically detect and flag expenses that violate the travel policy. The approvers would be notified of the policy violations as and when they occur. This further simplifies the work for your finance team as they can check the compliance of the expenses in real time and approve or reject them in a few clicks.
Prevents expense fraud
Expense theft is majorly committed by employees submitting expenses manually. The chaotic environment of manual expense processing provides the right setting for fraudulent practices, like submitting the same receipt twice and rounding up mileage expenses. Controlling these practices is hard, since manual expense processing makes it strenuous to identify suspicious claims and follow up with the employee concerned to resolve the issue.
One easy way to put an end to expense fraud is by automating expense management processes. Automation can pick up duplicate entries where the same expense is submitted twice, and send a notification to the submitter (and their approver) to either merge or delete the expense. Also, with customized workflows, you can maximize transparency by enabling a double review process - so there's at least one additional review after the immediate approver’s review before reimbursing the expenses.
Speeds up approval and reimbursement
Inefficient approval workflows, in which the managers and accountants spend a lot of time manually reviewing each expense report and passing tasks from one approver to another, lead to delayed reimbursement. Suppose a group of employees have just returned from a business trip. By the end of the day, your finance team will have a stack of envelopes filled with receipts on their desks. They'll have to check the legitimacy of every single expense in every receipt by verifying it against the policy. If they put off an envelope for a few days or accidentally skip a receipt, there goes the employee’s reimbursement.
You can reduce manual intervention by opting for an expense management system and customizing the approval workflows. So once an approver has approved a report, the task is automatically passed on to the next approver in line and they will be notified to complete their part in the approval process. After all of the approvals are collected, the finance manager can review and reimburse the expense with a few clicks.
Manual expense management limits the real-time visibility of expenses—the insights that you gather after extracting data from various sources could be weeks old. To keep track of when and where the firm’s funds are being utilized, your finance team would need at least a week to go through the records and come up with a report. To make quick, informed decisions, you should be able to analyse and view data as the events take place.Managing your expenses manually affects data accuracy and limits how much visibility you have into your company’s cash flow.
Most expense management systems provide extensive reports on expenses, trips, policy violations, reimbursements, and much more. With a few clicks, you can use the policy violations report to view the top policy violators in your firm, or use the expenses by category report to view your employees' spending patterns. Besides making quick decisions, these reports allow your finance and travel teams to work together to narrow down the best vendors for airline carriers and hotel chains and to negotiate better deals and discounts with them (think: cost savings). Finally, you can monitor your cash flow and track your firm's financial performance.
To summarize, manual expense processes are a pain for employees and finance/travel teams alike. And they're expensive: besides the cost of erroneous reimbursements, you have to pay in work hours to generate reports, process them, rectify errors, and deal with fraudulent expenses.
With an expense management system, your employees can capture receipts and generate expense reports on the go. They can also stay informed about the status of the approval process. Your travel and finance teams can maintain policy compliance, limit their manual intervention, and reduce the time taken to process reports and reimburse your employees. On the whole, an ideal expense management system can help you save loads of time and money, while keeping your employees productive and satisfied.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.