Why should you use an expense reporting software?
Expense reporting software is an integral part of the business automation process. With the help of specialist SaaS software and a dedicated app, companies can optimize their expenses and revitalize their management policies.
Why is good business expense management important?
Expense claims are documents that show proof of business expenses incurred by employees. It's very important for businesses to process these documents effectively since this has an impact on how the company manages its overall expenses.
Business expenses include all expenses that will be reimbursed by the employer. Reimbursement is mandatory for certain expenses. This is a burden on the business, and it's vital to properly monitor these expenses when optimizing the company's finance policies.
The traditional reimbursement method
Receiving claim submissions from employees
After incurring an expense, employees must inform the accounting department about the expense. Employees usually have to submit their paper receipts in person, often at the end of the week, in order to obtain a refund. When supporting documents are submitted too late or at the end of the month, reimbursement probably won’t take place until the following month.
Employees also often lose these receipts before they're submitted, and it's estimated that this leads to 30% of employees missing out on reimbursements every year. Without proof, it's very difficult to get reimbursement for business expenses if the company wants to avoid being hit with a tax adjustment.
Finally, some employees have a lot of business expenses, especially when travel is part of their daily work life. This is especially the case for the construction sector, where employees working on sites need to be reimbursed for their lunches or any purchase needed to manage an emergency.
Processing by the accounting department
Once the expense claim has been sent to the accounting department, all these business expenses have to be processed. The supporting documents are registered and filed. The expense is entered into the accounts and the employee is eventually reimbursed, usually with the next salary payment.
When there are a lot of business expenses, it can quickly become hard to manage all the pieces of paper. Processing every expense can take a long time for the persons managing them, who have to do everything they can to prevent delays in reimbursement. In 2015 a study estimated that this processing took 20 minutes on average, costing the company €53.
Finally, it's impossible for managers to quickly realize if the business expenses have gone over budget. It's also difficult to check individual data points or zoom out to get an overview of the spending policy in general. Expense managers are limited to the costly role of recording expenses and generating reimbursements.
Optimizing expense claim management
Optimizing the management of expense claims can lead to significant financial gains for the company. One of the objectives is reducing the risks of fraud, errors or losing receipts. But the benefits of going digital are greater than just increased efficiency.
The benefits of automation
Automation is at the core of companies' digitization processes, and its impact is felt at every level of the way companies function. As we know, it takes a lot of people to manage expense claims. From the employee reporting the expense to the accountant passing it on to the accounting team, including the manager having to approve it, the process involves the entire company chain. Optimizing through automation means the processing time can be streamlined at every level.
With automation, the company can offer employees a better experience by processing business expenses more simply, quickly, and intuitively. The same goes for managers who no longer need to keep track of each of their teams' expenses.
For the management and accounting teams, the tedious processing tasks requiring them to enter the information from paper receipts into the computer system are no longer necessary. The important data is input directly into the corresponding software and then archived. Auditors can also get a better overview of the company's expenses as a whole, and gain a better understanding of cash flow.
Finally, the company can regain control of its expense reporting policy. By automating data analysis, ambitious policies can be planned as well as a dynamic financial strategy.
Making profit with optimization
It's hard to calculate the ROI (return on investment) of digital optimization at first glance. However, with the optimization that comes from digitizing expense claims, the collected data quickly creates value instead of representing a processing cost.
Not only can managers use their working time for higher-value tasks, but automation also means the extracted data can be analyzed in far more detail. A paperless system allows for automated data analysis and more dynamic management, turning processing costs into potential profits.
Processing expense claims using specialist software
What are the advantages of using software to manage expense claims?
Expense reporting software makes it more efficient to manage claims, especially with its automation and paperless receipts. Its many advantages include:
- Drastically reduced risk of errors and attempted fraud
- Time savings and increased efficiency at every level of processing
- A more dynamic way of monitoring and managing expenditure
- Faster payment of reimbursements
Fewer mistakes and less attempted fraud
Expense reporting software drastically reduces the number of errors. When reimbursements are made using paper forms, it's very easy to make a mistake when recording the expense. The software eliminates human errors by taking care of data extraction.
In addition, since receipts are often lost, immediately digitizing the receipts significantly reduces this risk.
When it comes to fraud, around €700 euros per employee are lost to this every year (meaning between 10 to 15% of business expenses are fraudulent). In concrete terms, the software allows automatic detection of attempted fraud and anomalies by analysing trends and repeated business expenses. The software compares the costs between employees, calculates the distances actually traveled, and can even detect abnormally high expenses such as restaurant bills which are higher than usual.
Increased time savings and efficiency
The time savings made possible by software are significant, with some solutions allowing near real-time recording of expenses. Receipts can be scanned directly by the employee, immediately after purchase. In addition, thanks to OCR technology, the information is extracted from the image in just 3 seconds. Finally, the extracted information is automatically saved to the central database.
The management department and managers receive the details of the expense even if the employee is away from the office. This speeds up the entire processing chain since there is no need to wait for each employee to return to the office and go through the accounting department to file their expense claims. Paperless data entry and instantaneous submission are all the more important given the COVID-19 pandemic and the reality of teleworking and remote work all around the world.
Better monitoring of expenses
With task automation, auditors also have more time to perform their duties. They can visualize the status of expenses in real-time and compare the expenses with the allocated budgets.
With the help of software, managers can continuously track the compliance of expenditure with the internal financial policy. It's also much easier for them to detect non-compliant expenditure and prevent further instances of it. Finally, automatic generation of reports allows managers to make more ambitious decisions in the area of expenses.
The efficiencies are also reflected in the time taken to issue reimbursements. Management software helps reduce delays throughout the expense claim submission process; by integrating with accounting software, the reimbursement process becomes even more fluid.
Faster reimbursement builds employee confidence and simplifies expense management.
Stay tuned for the next part.