No matter how big or small your company is, a bad expense reporting process will leave a negative impact on the company. Expenses are not just your office rent or wages, but the expenses that your employees make while creating business profit – business travel, lunches, or any sort of business related purchase. Managing all these expenses can be painful for both employees and the finance department. Employees usually don’t show much interest in submitting expense claims, as they consider it a tedious and painful task.
So, what are the potential risks of having a sluggish and a manual expense reporting process? Let us have a look:
The Hidden Costs
Expense management requires back and forth communication between all the teams, especially between the finance department, the employee, and employer. Every claim requires verification, validation, and approval. Thus, making this a process that takes up the productive time of all who are involved.
Not automating the procedures makes the process troublesome. When businesses use paper and spreadsheets to process expense reports, mistakes are more likely to occur. This is due to the fact that paper receipts can get lost and it is difficult to figure out manual errors that can occur while entering the data manually.
In addition, manual verification wastes valuable time. Every expense should be validated to ensure that receipts match the figures submitted by the employee, and every claim has to check against corporate policy. However, organizations will see fewer errors and complications, even after deploying the automated solution.
Employees get Frustrated
Employees will show less interest in submitting expense claims manually and thus, their expense claims start to become backed up. This creates the need to work with paper all the time, which results in potential delays in the long run. And ultimately, delays cost you more money.
Managers who have to review and approve all these claims develop a real headache going through all the reports as well as validating and checking the submissions against receipts. Reimbursement delays would hit the company cash flow by levying additional fees and other penalties for credit card purchases. On the other hand, employees have to wait for a long period to be reimbursed. The average time can last for months or weeks. That’s a lot of waiting time, which can be frustrating for employees.
Missing Valuable Reports and Insights
By not managing your expenses in an effective manner, you can miss the opportunity to analyze spending patterns. Accurate reporting allows you to figure out trends in employee expenses, spot anomalies, and identify ways to save money in your business. Without having real-time visibility, you cannot add value to the processes. Additionally, this would help you make informed decisions about corporate spending and budget planning.