What is expense management automation?
In an ideal world, filing expense reports should be a breeze. Unfortunately, we don’t live in one. Let’s accept it. Filing an expense report, cross-checking, and approving it can be daunting for your employees. That’s because they’re doing it wrong, or you are yet to automate your expense management.
If you’re still using the good ol’ paper receipts, bills, receipts, and spreadsheets to file and process expenses, it’s high time you switch to expense automation. You don’t have to take our word for it. Here are seven reasons you should automate your expense management – read the post and make an informed decision.
Expense management automation, automates expense reporting, tracking, approving, and reimbursing employees using expense management software. What’s more, with expense management automation, you can ensure all the expenses are policy compliant and your employees don’t overspend on approved or unapproved expenses.
Must read: Expense management – The ultimate guide
Why is expense automation important?
Let’s accept the fact: manual expense management can gravely affect the working of your organization. Despite its disadvantages, many firms are unsure if they should automate expense management. That is because they think their organization is not big enough to automate the expense management process. Some companies think the already existing legacy system is good enough for them. If you are one such organization, we think it is high time you automate expense management.
Traditional expense management processes are error-prone and time-consuming. What’s worse, you will not have complete control and visibility over your expenses.
Traditional expense management process
1. Submit expense reports
In manual expense management, your employees fill out countless forms and produce hard copies of bills, receipts, tickets, and other necessary documents to submit an expense report.
2. Record expenses
This expense report is then forwarded to the head of the department for approval. Next, the approved report is then sent to your manager and finance team for verification.
3. Manager approval
The head of department or manager checks the expense report for authenticity and approves/rejects it. The report is then sent to the finance team for compliance check.
4. Policy compliance
The accounting team ensures the employee follows all the T&E policies of your company and manually checks the bills and receipts for authenticity.
And finally, if there are no red flags, the finance department will reimburse your employees.
The entire process sounds exhaustive, right?
Manual expense management could work great for small organizations. But, the whole process is a hassle for huge companies with multiple employees traveling continuously for business trips.
Problem with manual expense management
Many organizations out there are still following manual processes to file, verify and report employee expenses. Maybe hundreds of spreadsheets and a mountain of paperwork are getting the job done for you. But, if you compare the pros and cons of the manual expense management process, the cons surely outweigh the pros. That’s because manual expense reports are often messy and filled with errors.
Here are some of the problems caused by manual expense report processes:
1. Multiple errors
The chances of errors creeping into the expense reports while manually filling or verifying are high. For example, a mistakenly added or deleted zero by your employee or the finance department can cause irreparable damage to the report.
Another scenario is while entering the digits into the accounting system. The finance department can mess up the numbers even if the employee enters them correctly. And to increase your misfortune, finding the source of such errors can sometimes take many days or even months.
2. Expense frauds
In a manual expense management system, some employees could take advantage of the loopholes in the system and submit fraudulent expense claims. In a mountain of receipts, fuel bills, transportation tickets, and other printed documents, finding a duplicate bill or receipt is like looking for a needle in a haystack.
3. Spreadsheets, spreadsheets everywhere!
The go-to tool in manual expense reports is a spreadsheet. Using spreadsheets for expense management might look pretty easy, but that’s not true! It can take precious man-hours to enter the data and create a report. On the other hand, your finance team can now create a robust expense report with just a few clicks by automating the expense management process.
4. Delay in approval
Yes, in all-expense management methods, a considerable delay in approval tends to happen. However, the delay of the approval process is much longer if you’re taking the manual route. Manual expense management can delay the reimbursement process, which can cause a dent in your employees’ morale.
5. Poor policy compliance rates
In manual expense management, implementing travel expense policies and maintaining compliance could become a nightmare for you and your team. The flaws in your expense management system can end up allowing requests that violate your company’s policies.
How does automated expense management work?
Here’s how an expense management process works in a company that uses T&E software:
1. Expense reporting/filing
Using the web or mobile app of the T&E system, employees can file the expenses on the go. After filing the expense report, it is sent to the managers for approval.
Read more: Expense reports
2. Expense approval
After the employee sends the report, approvers get notified via SMS or email. The system will include auto-flag policy violations, if any, and the approver can then approve or reject the expense report if it violates any policy.
Read more: Expense approval Process
After the manager’s approval, the report is forwarded to the finance team. The finance team validates the expenses and reimburses the employees on the same platform.
Read more: Expense reimbursement
Traditional expense management vs Automated expense management
Are you still confused about continuing to use traditional expense management or switching to an automated expense management process? Yes, arriving at a decision could be a challenging task. Don’t fret – we’ve done all the legwork for you.
Here’s a detailed analysis of traditional and automated expense management:
Automated expense management should ideally be your go-to option for saving time. With automated expense management, your employees can submit expense reports without hassle, and your finance teams can check these reports quickly. A win-win situation for all the teams involved in the process. On the other hand, in the traditional method, the whole process can take a lot of time.
Long and pointless T&E forms will not help improve your employee’s efficiency, period. The entire process of filling out umpteen forms and paperwork distracts them from their actual work!
To err is human. But remember, the machine never makes mistakes! Manually filled expense reports are often error-ridden. This could be happening because of a wrongly filed expense report or could be a mistake from your finance team. Expense automation is your best bet if you’re looking to minimize or eliminate errors in your T&E reports.
In today’s digital world, without any doubt, data is king. Moreover, correct and meaningful data could make or break a company. In the manual expense reporting process, you don’t have the possibility of obtaining real-time data. This makes it difficult for you to manage the expenses and track your organization’s financial performance.
Who benefits from automated expense management?
Different teams in your company have different goals and desires regarding an automated expense management system.
Here’s a list of people who can benefit from expense management automation:
An automated expense management system will make your employees more happay and efficient. Let us explain how. An automated expense management process means easier expense reporting and faster expense reimbursement – this can positively impact the morale of your employees.
They can now stay focused and productive instead of spending hours trying to file an expense report.
2. Finance teams
Automated expense management systems allow the finance team to closely monitor and see where every penny in the business goes. They can understand who’s spending how much and for what. Also, compliance and reconciliation are now just a matter of a few clicks.
3. CEOs, CFOs, and business leaders
Automated expense management offers rich real-time data and analytics to manage the present budget better and accurately predict the future budget. What’s more, expense management automation can maximize profit and positively impact the bottom line.
Benefits of expense management automation process
When it comes to expense reports, we’re sure your employees and finance team are on the same page – they hate the whole process! This is if you’re still stuck with manual expense management. Want to get out of this financial mess? We’ve two words for you: expense automation.
According to a study by JP Morgan, companies that use automated expense reporting systems save up to 58% in processing costs compared to companies that still use traditional methods. Not convinced yet?
Here are seven reasons why expense management automation could prove beneficial for your organization:
1. Goodbye to paperwork
By automating your expense management, your employees can bid goodbye to the cumbersome process of filing plenty of paperwork. Expense management software allows your employees to file expense reports faster than ever.
Moreover, they can submit pictures of bills and receipts and the report without hassle. The finance team can now review the entire report and validate it quickly.
2. Error-free reports
Expense management automation does not just make the expense filing process more straightforward, but it can also make it error-free. With expense automation software in place, your finance team need not enter a mind-boggling amount of data into spreadsheets – because that’s where most errors often occur. Even if an error occurs, it can be traced back to the source and rectified at the earliest.
3. Ensures compliance
Ensuring compliance could be arduous, with hundreds of expense reports accumulating on your finance employees’ desks. In the traditional expense management method, the finance employee must manually go through every receipt, bill, and ticket and ensure each document does not violate your company’s travel policy.
This is where automated expense management software outperforms the manual method. You can program the software with your company’s travel and expense policies. Your finance team can check compliance and instantly approve or reject the expense request.
4. It helps prevent expense fraud
Some of your employees can submit fraudulent expense reports in manual expense management. Unfortunately, your finance team could overlook and approve the fraudulent claim because of the mounting paperwork. Imagine the number of fraudulent claims that go unreported in a year and the loss incurred because of those.
Automated expense management allows the system to quickly find malpractices like submitting duplicate bills, rounding up expenses, etc.
Read more: Prevent expense fraud
5. Faster approval and reimbursement process
In automated expense management, your managers and finance department employees need not go through the lengthy expense reports and travel documents that employees submit. On a single screen, they can view the reports and corresponding documents and approve or reject it with a single click.
Also, expense management software has a well-defined approval workflow that will fasten the process. Even if the approval process does get stuck in the middle, your employees can remind the concerned department head or the manager to approve the expenses.
6. Get real-time data
Expense automation offers you real-time visibility of expense data when it comes to expenses. As a CFO, this data is vital to accurately track the costs, forecast future expenses, and manage your budget more efficiently.
7. Save money
For your company to make money, you would ideally want employees to complete their tasks and not waste hours filling out expense reports. What’s more, tasks performed by multiple employees can now be replaced with an automated expense management system. Thus saving you a considerable amount of money each financial year.
Image Credit: peoplespheres.com
What qualities does the expense management system have?
Here are some of the things you need to consider while choosing an expense management solution for your firm. A good expense management solution worth its salt must be able to do the following things:
- It can streamline expense management
- Auto-fill expense reports with data obtained from air tickets, hotel bills, restaurants, and others
- Integration with existing accounting, ERP, and accounting systems
- Integrate with your existing enterprise resource planning (ERP) system
- With credit card integration, reconcile expenses
- Track expense data securely
- A mobile app to manage business expenses easily and report expenses without any hassle
And additionally, here are some of the good expense policies tips you can use to make your expense management system efficient:
- Make the expense policy simple and easy to follow
- Ensure non-policy complaint reports are not approved and sent back to employees
- Ask employees to enter expense data accurately
- Set a time limit for reimbursement and ensure you pay back employees within the time
How to choose the right expense automation software?
Automating your expense management is just the first step in creating an ideal expense management process. The real challenge lies in choosing the best software that suits your business and organization. Here are some of the points you should consider before choosing automated expense management software:
1. Simple to set up and easy to use
Make sure you choose an expense automation system that is simple to set up and easy to use. That’s because many expense automation systems are very complex to both set up and use. Your employees could find it challenging to learn the nitty-gritty of the system. Therefore, choosing a system that offers the best user experience and is easy to navigate is always best.
2. Suits your business needs
Investing in an automated expense management system that suits your company’s size and needs is the way to go. Ensure you choose a flexible system, allowing you to add and remove multiple employees and track numerous expenses like mileage tracker, petty cash, etc.
3. Offers you the best features
Choose expense management systems that offer you top-notch features like:
4. OCR technology
Allows printed documents to be scanned and entered into the system. Using this feature, your employees can take a picture of the printed documents and create an electronic version that they can use in the expense report.
5. Populate expense reports
Some expense management systems allow you to auto-populate the expense reports using soft copies of air tickets, hotel booking receipts, restaurant bills, etc.
6. The most bang for your buck
This goes without saying – always choose an expense automation system that’s worth your money and offers the best services for the lowest possible price. This is where we can help you. Let’s tell you why you need to.
Read also – Types of Expense Categories
Automate your expense management with Happay
Not all expense management systems are the same in the automated expense management universe. If you’re looking for an industry leader to help automate expense management in your firm, look no further than Happay.
With Happay in place, your employees and finance staff no longer have to worry about the gruesome expense filing process. Your employees can now file expense reports on the go using Happay on their mobile phones. Also, the expense verification and approval process are easy on Happay – it cannot get simpler than this!
Using Happy, you can increase your organization’s spend visibility, control and speed up processing time, enjoy greater policy control, and make more strategic decisions.
The process of using software to automate expense processes, such as creating, recording, and approving expense reports, is called expense automation.
Yes, expense management is essential in running your business seamlessly. Expense management automation can help you track your organization’s expenses more accurately.
The expense process is a set of procedures or policies streamlining a company’s spending. All the employees in the company need to follow this process to get reimbursed for their expenses.
Expense automation can simplify the reimbursement process and make it quick for your employees. It can also help the finance department to sift through expense-related data more efficiently.