Expense Reimbursement Challenges & How Expense Software Could Help
Employees spend billions of dollars on corporate travel expenses. Expense reimbursements give organizations control over employee spending by giving corporate cards with direct lines of credit to their bank account. Finally, the business ends up issuing reimbursements for extremely legitimate expenses after a lot of back-and-forth.
This process creates confusion among employees who are not familiar with the ins and outs of the purchasing policies. Although expense reimbursements cause a lot of friction and frustration, it is thought that the process works well. Expense reimbursement will not only create inefficiencies across the business operations but also hurt the employees’ experience with possible delays.
What is making expense reimbursements so difficult?
Employees make purchases using their credit cards that can be reimbursed by submitting receipts. However, the problems that arise from this simple process are many.
Leveraging a credit limit places a financial burden on employees
Employees may not have the funds to spend on business expenses. Paying for business expenses limits an employees’ personal line of credit, which means they have to hold off on making their personal payments until they are reimbursed.
Traditional expense reimbursement processes hurt employees as paying for the client’s lunch, or corporate travel could be a hardship. Therefore, the finance team needs to think about how their processes might impact employees across the company.
Expense reimbursements are time-consuming
Expense report processing is a time-consuming manual work for employees and financial departments. Employees spend hours filing expense reports, gathering receipts and transaction data. Managers are required to review and approve requests, post which it can be sent to the finance department. The finance team has to spend time processing expense claims and reconciling transactions before processing reimbursements. The whole process has a lot of back and forth between the parties when data is incorrect, receipts or approvals are missing.
Employees have to wait all a while to get their money back, which further places the financial burden as discussed above. Around two in five employees have experienced cash flow issues due to the slow reimbursement process. Moreover, the time spent by employees throughout the whole process could be better spent on strategic and high-value activities for the company.
Ambiguity in policies frustrates employees
Corporate travel and expense policies are complex, unclear or conflicting. Some companies do not have detailed policies which leads employees to spend out-of-policy. Unclear policies would make employees lose money by not reimbursing on time. The finance department should enable processes that ensure employees adhere to the policies. Policy adherence streamlines the reimbursement process and helps employees understand what expenses are out-of-compliant. Dealing with miscellaneous spending and requesting reimbursements are not fun for anyone.
The biggest problem with the expense reimbursement process is the bad experience it creates for your employees. Your workforce is trying their best to succeed in your company and this process could result in undue stress and frustration. The expense reimbursement process should not be a roadblock, rather than being an indispensable method to grow your business globally.
Proactivity is important
As expense reports are often submitted weeks after the purchases were made, the finance departments are unaware of what has been spent and unable to find out-of-policy expenses before it’s too late. This places a huge burden on employees to pay out-of-pocket for corporate expenses and puts the finance department at risk of issuing or denying payments.
Implementing a proactive system that enables employees to stay within the policy can help address the reimbursement issue. Some of the methods such as configuring expense limits, enabling pre-approvals and leveraging the expense report solution can help businesses stay on track while having complete control over employee spending.
How automating expense reimbursement process could help?
Automating expense reimbursement process could bring in many benefits, out of which a simplified reimbursement is the key. Let’s see how expense report software could address the underlying issue of every business.
The expense report solution allows you to configure business rules at the role, department or employee level. So, when an employee tries to submit out-of-policy expenses, the solution shows an error highlighting out-of-policy submission. Likewise, out-of-policy submissions can be stopped at the employee level, without wasting the finance team’s time to review the reports. Alternatively, out-of-policy submissions can be reported to direct managers, allowing them to take a call on expense submission.
Define expense limits
Defining expense limits could be another solution through which you can accelerate the expense reimbursement process. Expense software enables businesses to define spending limits by expense category for a certain period. When an employee tries to submit an expense that exceeds the spending limit, the solution restricts the employee from submitting that expense. Employees either have to review the expense again or submit to the manager stating the reason. This eliminates out-of-policy submissions and gives you complete control over employee spending.
Artificial intelligence-based expense solution reads and analyzes the data patterns of employee spending and identifies expenses that are not in compliance with the business rules. An expense report software gives you a clear visualization of employee spending so you can easily make out who is spending what and why corporate expenses are going out-of-control.
Besides these benefits, automating the expense reimbursement process would result in greater control, and efficiency while ensuring employee satisfaction at all times.