Employee expenses are accrued by employees when spending money during a business trip, for example, when undertaking their duties. Tracking, cross-checking, managing, and reimbursing these expenses can create a lot of work for finance departments and leave room for mistakes or even fraud if handled inefficiently. This is especially true for businesses that use traditional methods of receipt management.
While methodical expense policies are the best way to manage employee expenses and to ensure a business is always audit-ready, hoarding paper receipts can easily put a spanner in the works. Luckily, modern expense management software has swooped in to save the day with digital receipt recording, ensuring the audit readiness of all organizations that utilize it.
But why are modern receipt management techniques better than traditional ones? And is there actually anything wrong with these classic methods? Let’s take a look.
What is receipt management?
Receipt management refers to the process of storing, filing, organizing, and tracking accurate receipts. Receipt management is a critical aspect of accounting for businesses of all sizes. Even in personal finance, receipts are used to track bills and household spending; the same applies within a business context. Organizations also use expense receipts as a way to track revenue. Moreover, the practice of expense receipt management is also key in terms of audit readiness and is not just a method for keeping things organized.
The traditional methods of receipt management have recently experienced a revolution, however, with digitized, AI-powered receipt management software now widely available and affordable.
The traditional receipt management
Businesses of all sizes still adhere to some type of traditional receipt management, no matter how hard they try to oust it, and accounting departments and employees still find it extremely cumbersome and inefficient. This physical receipt management system often results in delays when submitting and approving expense receipts and reports.
It is an accountant's job to validate each and every expense after cross-checking it with set business policies. The entire sequence of events causes numerous issues that ultimately affect productivity and employees if they are waiting to be reimbursed. Unfortunately, this is still the process that is followed by many companies in the US and around the world. Reports suggest that 43% of organizations in the US still use manual processes such as these to manage expenses.
We have alluded to a few of the challenges that come with traditional receipt management here, but let’s take a look at some of the biggest problems that businesses face.
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Biggest challenges of traditional receipt management
It is prone to errors
In the expense reporting process, multiple people need to track and sign off various documents. When businesses are dealing with physical receipts and documents received via email, fax, courier/mail, it becomes confusing and tricky to organize. Considering the fact that this is all done manually, human error is ever-present, and the chance of an error occurring is likely. Common errors include incorrect payment amounts, duplicate payments & invoices, and wrong recipients.
In a recent survey, 26% of respondents suggested that their organizations don’t know whether submitted expense receipts and reports are in line with company policies. This falls in the ‘error’ category as businesses could lose a lot of money to careless spending and employees taking advantage.
It can be time-consuming
Manually managing and actioning paper-based expense receipts and invoices can be difficult and time-consuming as they usually require cross-referencing and validating. Without any form of automation or seamless management software, acquiring the necessary approval can also take time and cause serious delays and a backup of expense reports waiting to be actioned.
Storage of receipts
Physically storing receipts can be a serious burden for organizations, especially as they grow. Implementing an effective storage system that allows physical receipts to be easily recalled as necessary without any losses or errors is difficult to perfect with traditional receipt management.
Ease of access and searchability of receipts
When receipts need to be found or recalled in case of an audit, for example, traditional management systems would typically call for a spreadsheet to keep track of the physical location of each receipt and expense report. Entering all the details of each receipt so it can be easily found is timely enough, let alone going through endless spreadsheets actually trying to locate exact reports.
Despite these problems, figures show that 44% of businesses don’t have any immediate plans to introduce dedicated expense management solutions. Let’s take a look at what these companies are missing out on with modern receipt management software.
Modern receipt management processes
Nowadays, companies utilize digital expense management software to process, manage, and pay expenses. This software allows employees to easily input expenses for approval and upload digital receipts through an online portal or app. This new wave of expense management applications streamlines and automates expense receipt submission, and simplifies the review and sign-off process, all while eliminating the paper trail and reducing administrative struggle.
Accounting departments now have complete visibility of employee spending in real-time and can seamlessly track all expense receipts and reports. The best expense management software also utilizes AI to analyze expenses and identify cost-saving opportunities.
It goes without saying that this modern receipt management process that utilizes advanced software comes with many benefits over traditional methods. Let’s take a look at some of the key advantages that are persuading businesses to transform their organizational processes.
The unique benefits of the evolution of receipt management
Receipts scanning feature
A pain point for all employees is the worry of damaging or losing expense receipts during business trips. There are few things worse for a dedicated employee than to realize the money they have spent may not be recouped because of a lost receipt.
The mobile scanning feature of modern receipt management software allows employees to simply scan receipts with the camera on their phone, thus bypassing any chance of data loss. The software also converts the text on the receipt into machine-readable data that automatically files receipts by date and expense category.
Unlimited cloud storage
Instead of trying to cram physical receipts into every nook and cranny, businesses can now store an unlimited amount of digital expense receipts and invoices in the cloud. For businesses that are growing quickly, this solution is imperative to maintain operational efficiency and accuracy.
Easy view and track of expenses
All expense receipts and reports are processed within a cloud-based platform. This allows dedicated departments to stay in the loop and effectively track reports while reducing back and forths between employees and accounting teams.
The storage of receipts in the cloud provides easy viewing and access for a number of team members and departments from anywhere. All these benefits ensure your organization’s audit readiness for when that stressful time comes.
These benefits and more are all present in Jenji’s automated expense management software.
Evolve your receipt management system with Jenji
Jenji’s automated expense management solution is perfectly tailored to your needs while respecting your financial and auditing constraints. Whether you’re an SME or a large corporation, our versatile receipt management solution can be seamlessly integrated with your current digital environment.
Jenji brings your receipt management systems into the 21st century. Our intuitive software allows you to seamlessly Implement effective methods and clear policies for managing and tracking expenses so your business is always audit-ready. Employees can upload digital receipts with a simple photo and include predefined information to ensure each expense is in accordance with US tax law.
To find out how Jenji can help your company manage business expense receipts, as well as a wide range of other bookkeeping and payment solutions, get in touch with us at email@example.com.