Continuously evolving small businesses tend to face new challenges quite often. While a few challenges have straightforward solutions, the others may not especially those related to the company’s financial aspects. Staff expenses are the second biggest controllable cost heading in several organizations. Despite, many company owners tend to overlook the efficient ways to handle and minimize these expenses.
Not streamlining staff expense management methods can have a negative effect on your business. Some of them include.
a) Suboptimal tax planning
b) Minimized staff productivity time
c) Fake/duplicate expense claims
d) Ineffective accounting and human resource procedures and time management
e) Long, drawn-out reimbursement cycles that impact employee satisfaction
Therefore, expense reporting is crucial to handle expenses effectively. Organizations must adopt the most optimal practices to handle expense reports proficiently.
How an Inclusive Expense Reporting System Help to Manage Staff Expenses
a) Fast reimbursement cycles
c) Helps cut back on tedious and recurring workflows
d) Helps save expenses and enhance productivity
e) Improves staff expenses
Disadvantages of Manual Expense Process for Workers and Approvers
Traditional, paper-based expense reporting methods get the job done, but are unnecessarily tedious, costly, time-consuming, and can’t be analyzed properly.
From a worker’s point of view, in a manual expense reporting.
- Hold on to receipts for submission.
- The staff should save receipts for each company-related purchase- email, paper, or card transaction receipt.
- Fills in monthly expense reports on Excel sheets.
- Needs to send the expense report physically for verification and compliance.
- Has to send separate folders of all receipts to the HR and finance department.
- Waits to hear back from the management.
- The approvers send across modifications via email.
- Then the staff updates alterations manually and once again send the reports.
- Waits to get reimbursed.
From a manager’s point of view, manual expense reporting includes.
a) The manager/approver will receive reports from employees.
b) Then they are sent to the finance department.
c) The finance department manually needs to substantiate each expense to scrutinize for out-of-policy.
d) The violations are then reported back to the manager.
e) The manager gets back to the staff, mandating the essential modifications.
f) The approver sends it to the finance department.
g) The finance department corroborates the reports manually once again.
h) Approved expense reports go for reimbursement processing.
Once all these have been accomplished, the finance department will update the accounting books manually. But today, expense management automation is easy to implement, and far more effective at each step.
Ways Automation Helps in Expense Management
Automating travel and expense management saves money, time, and energy while bringing about resource optimization and transparency. The establishment can concentrate on scalability and profitability without the need to fret about the inconveniences related to traditional expense management.
Expense management automation is crucial to handling your financial methods. Organizations should focus and provide pre-eminence to making the expense reporting a real-time experience for all employees.
Optimize Methods, Provides Granular Insight and Saves Cost
Automation helps to streamline methods in many ways that help to cut down expenses. Every expense is located centrally, enabling stakeholders to see, edit, and approve claims in real-time. Staff bank accounts can be linked to allow direct reimbursements. Business credit cards can get integrated, acting as the second-factor authentication for the claim amounts.
The organization also has full visibility on expenses that are being paid, to whom they are paid, and from what budget. It helps to know when and where spend occurs. Benchmarking can be done, and limits can be set accordingly, whether by the team, destination, expense type, or job role.
By leveraging a cloud-based expense management solution, employees do not need to wait to get back to their workplace to perform this task. Approvers/managers have complete visibility into potentially counterfeit spending or inflated expenses. Balances and checks can be set to auto-detect suspicious claims. Data can be assessed, and built-in and custom reports can be created to provide holistic insights into spend patterns, deviations, and can be utilized to determine the areas of optimizations and cost reduction.