Organizational expense management processes and practices are hard to get right at the best of times. In many organizations, this process is still handled with methods that seem outdated in this digital age. By using paper expense reports clipped with bills, and engaging multiple personnel to pore over them and process them for reimbursement, organizations are asking for trouble in many ways such as error-filled reporting, inaccurate entries, fraud, and delays in time. This is just one of the many ways that lead to expense management goes wrong for organizations. This post is about many of these ways that can make that happen, and what organizations have to watch out for.
Paper Expense Reports:
As mentioned above, paper expense reports are one of the major reasons why expense management goes wrong. It is very easy to go wrong in reporting expenses when such methods are used. For starters, employees will have multiple types of expenses such as travel, stay, food and beverage, and so on. Combining all these bills together and putting down the numbers on paper is not exactly a very scientific exercise. Even if the employee does not intentionally cause fraud, there is every scope for a mistake to be made. If we take this one step further, there is also every chance that intentional fraud occurs in the process. If the number of expenses increases, it becomes tiresome for the company’s personnel to verify all the line items, and once they randomly verify a few expenses, they will process the reports further. Giving scope to such mistakes, intentionally or otherwise, is what paper-based expense reporting leads to.
Lack of Communication:
Expense management is not a simple process carried out by a single team or department. It quite literally involves multiple stakeholders across the organization. First, there is the employee who actually travels for company work. Then there is the team leader or manager who has to verify the expenses that can be made as per company policy. Then there is the expense personnel dedicated to verifying these reports further. After this comes into the picture, the finance team will have to handle the reimbursements. This is a process that will take several days, even when tasks are not delayed due to laziness or incompetence. This is a process that will need communication among all the people involved in the process to ensure that is completed on time, or at least, to keep the delays to a minimum. Lack of efficient communication among these different groups of stakeholders is one reason why expense management goes wrong.
Lack of Policy Enforcement:
Company expense management policy is one of the most important ways to keep expense management in check and to ensure that costs don’t spiral out of control. Many firms do have an expense management policy that supposedly governs expense management, but it doesn’t always work. Policy development is not always followed by policy enforcement. After all, if the policy is to be enforced, all the checks and balances involved must be active and have the incentive to ensure policy enforcement. It is not easy to make team leaders and managers follow company expense policy nor is it always fair to expect them to do so since some new expenses might always come in. Therefore, the expense policy must also be flexible enough to allow for expenses to be reported, expenses that could well be legitimate but not reported.
However, not all is lost with regard to expense management. What’s broken can indeed be fixed if the firm employs good usage of technology. This technology comes in the form of online expense report software, software that allows organizations to rein in the spending on expenses and keep a check on costs associated with it. In the first place, the software eliminates the usage of paper for all tasks related to expense management, and everything happens online, which means that different users can complete their tasks anywhere, and not necessarily waste time. Users can also complete their tasks in real-time, therefore reducing procrastination, which would lead them to complete multi-page expense reports at one time.
Expense report software also allows for adequate communication among all the stakeholders, and offers firms total flexibility in implementing their expense policies.