As governments in many parts of the world ease Covid-19 restrictions and more employees return to the workplace, businesses must adjust quickly to the massive shift in expectations. The pandemic fast-forwarded remote work and digitalisation trends, and staff now look for more support and transparency from their company. Forward-looking organisations recognise that establishing smooth, technology-driven processes is essential to creating a productive, positive employee experience and efficient, more sustainable business operations.
Automating expense management is a great place to start this digital transformation in the workplace. Over the past two years, claims for travel, subsistence, and mileage have been replaced by invoices for home office equipment, Internet and electricity bills, as many companies adopted a flexible and hybrid approach in their daily operations. This has led to an increased burden for the finance teams, especially for global businesses.
This article highlights five best expense management practices to help you streamline and improve your workflow, reduce unnecessary costs and reduce your carbon footprint.
Establish a Transparent Expense Policy
A clear and transparent professional expense policy that everyone understands is essential when establishing rules to manage expenses. This allows for control and the streamlining of the many stages of expense report administration.
A good business expense management policy should be simple yet detailed. You must set a clear and transparent approach that provides clarity and ensures proper validation and accountability.
Before setting the rules, you should remember that consistency is vital. You shouldn't treat different employees differently, and your policy needs to be applied company-wide and not department-centric.
Create distinct categories and budgets so your employees know how much is allowed and which expense categories they can spend under.
The expense policy also needs to be fair so that your employees can understand what can or cannot be reimbursed.
A defined approval process is recommended to ensure proper validation and accountability at each level. This is also to avoid any errors and anomalies that, however small, could impact the entire expense report management process.
While there are advantages to adopting an expense policy within an organisation, it is important to consider local requirements. Certain countries or business units may incur a specific expense on a regular basis that is outside of the expense policy. It needs to be taken into account, or it will create more barriers than efficiency.
Leverage on Innovative Technology
Businesses invest in technology to gain a competitive advantage and cut costs. Understanding the cost drivers will enable companies to scale and respond quickly to a constantly changing landscape.
When it comes to expense management, companies are leveraging innovative technology to help validate and review high volumes of receipts and invoices.
Validators and controllers spend a significant amount of time validating and reviewing each expense item after the cut-off. This is usually a hectic period for finance departments as they will need to process claims, payrolls and month-end reports.
Without proper technology in place, it is a manual process, and it is very time-consuming to go through each piece of receipt and invoice. When the volume increases, this becomes unsustainable.
Fraud expenses are a hindrance to managing your company’s expenses. These deliberate attempts at inflating reimbursements often slow down your working speed and generate more errors.
A good expense management platform can detect anomalies and fraud on expense reports and help you improve your expense strategies. It incorporates new technologies such as AI and automation into the platform, automatically processing all your invoices and receipts without any errors.
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Automate and Streamline the Processes
Automation of expenses improves operational efficiency. It assists companies in managing their expenses by grouping, labelling, and organising them into reports that are easy to understand. It also reduces the time spent on administrative tasks, including processing expenditure submissions/approvals, tracking expenses, and analysing data.
Despite the rising trend of expense management automation in companies, more than 45 per cent of the companies are still using a manual-based expense reporting system in Asia Pacific. Over in the United States, automation helps businesses reduce payroll costs by up to 80 per cent.
It is clear that paper management is time-consuming, and the company incurs opportunity costs if a senior manager is tasked to perform low-value duties like tracking and recording receipts and invoices.
On the other hand, automation allows you to streamline all your expenditure processes and collect the relevant data. From expense review, conformity check, VAT calculation, and expenditure analysis, most steps can be automated and tailored according to your needs.
Another key benefit of automating your expenses is preventing expense fraud, such as abuse of business/entertainment expenses and duplicate expenses, which constitute 15 per cent of business expenses for companies.
Automated solutions make it possible to block the majority of frauds. They represent an effective means of detecting anomalies and reducing the risk of cheating.
Maintain Real-time Data Visibility
Keeping track of company costs is challenging even in the best of circumstances. Businesses have set yearly budgets and then worked toward them for what seems like an eternity.
Unfortunately, many business leaders don’t have enough control or real-time awareness over their fiscal activities.
Finance teams use data to close the books and adjust earnings forecasts on a monthly or quarterly basis. However, even after hours of hard work, the information rarely makes its way to decision-makers fast enough to actively impact management decisions. As a result, teams spend impulsively without understanding the consequences.
Having said that, businesses must keep tight financial oversight. Financial teams must have real-time visibility into their data visibility to do so.
An effective expense management platform such as Jenji lets you extract the value that resides in your business expenses by collecting your internal and external data. Importing this data will make it easier to reclaim VAT and identify sales margins by calculating the cost of acquisition. The cash flow is accessible in real-time, allowing you to cut costs ultimately.
Importing this data will facilitate VAT recovery and the identification of sales margins through the calculation of the cost of acquisition. The cash flow is visible in real-time, and you can finally reduce your costs.
Optimise your Spending
In the last two years, CFOs and finance controllers have been subjected to a real-time stress test of their strategic plans, prompting them to reconsider their budgeting and forecasting procedures.
The experience of submitting an expense is important. Many companies have neglected the experience of the validators or controllers checking and validating expenses one by one and the CFO or financial controllers who need to review and analyse the expense data to find ways to save cost and optimise spending.
From a CFO’s perspective, they need data that contextualises the purpose and intention of the expenses. They need to understand the low-medium-high of each expense category to find areas to optimise their spending.
Hence, investing in expense management tools enables important real-time forecasting, budgeting, and financial planning and will help you to optimise your expenditures. If you have any burning questions regarding expense management solutions, please contact our team at email@example.com, and we will be happy to assist.