Whether a startup or a large enterprise, every penny counts in any kind of business. You must keep track of company expenses in order to control the finances and enhance profitability. Inaccurate data and miscalculated costs can have a negative effect on your business finances if not instantly resolved.
If your organization is still managing expenses manually with paper receipts and spreadsheets, there is a high possibility the reports may be inaccurate, which poses larger corporate risks and could hinder the entire company from increasing overall productivity.
Even though traditional processes might work well enough for reimbursing employees, however small inaccuracies can create major issues when accumulated.
Here we’ve discussed a few challenges associated with manual expense management processes to help you understand and respond accordingly.
Unclear Expense Policies
Every company has its own unique travel and expense policies. Usually, those expense policies can be confusing, making it difficult for both employees and approvers to understand. Both the employees and their employers must manually check each expense to ensure policy compliance.
If the employees don’t understand which expense falls under which category and whether those expenses are in accordance with company’s rules, can mean lost time and money for both the company and employee.
Plus, it is difficult for the approvers to track and verify every employees’ expenses against company’s policies to eliminate any expense report errors, which could add additional costs the company.
Delayed Employee Reimbursement
Most companies say time is money. However, the age-old paper-based expense management processes are too time-consuming and are prone to errors. It might be due to the time employees must take to gather receipts and file the expense report with the proper supporting documents, then more time for the approver/manager to check and verify the expense claims.
The result is a lengthy expense reimbursement cycle. According to research conducted by the Paystream Advisors, more than 16% of mid-level companies feel long expense claiming cycles as the most significant challenge due to which they’re missing out on more proactive actions.
Poor Expense Visibility
Approvers must thoroughly double-check all the crucial details of every expense report to eliminate the possible risk of approving fake or inflated expenses. Checking each expense receipt against the supporting documents to find the fake, overstated, or duplicate receipts with the manual process is time consuming and tedious.
In spreadsheet-based processes, there is a high possibility the receipts with inaccurate data may go unchecked, which adds more costs to the company.
The Bottom Line
However, the challenges mentioned above can be eliminated by using a comprehensive expense management solution. Automating the entire expense reporting submission process allows employees to scan and submit their expenses with the proper supporting documents digitally regardless of the time and/or geographical location.
Once employees submit their expenses digitally, the software extracts crucial data from the expense receipts automatically with Optical Character Recognition (OCR) technology, providing approvers with complete visibility which they need to eliminate any falsified or inflated expenses.
It automates the rule-based policy enforcement, making it easier for the finance team to easily disapprove the out-of-policy claims. Thus, investing in an expense management solution helps you streamline the expense approval and reimbursement cycle while ensuring regulatory compliance.