Business Systems

6 Reasons Expense Management Automation Is Crucial In 2020

Source: Enterprise Times

Author: Manaswini Rao Kaki

COVID-19 has brought about rapid changes in the way businesses function. Undeniably, businesses have to re-evaluate and re-model some of their core processes to adapt to the “new normal” of working. One such core business processes impacted by the pandemic is Expense Management.

Employees and Finance teams can no longer physically chase each other for expense report submissions, clarifications on receipt compliance, or processing of employee expense reimbursements. However, businesses must continue to reimburse employees and keep detailed records compliant with the rules and regulations laid down by tax authorities.

Finance leaders have been talking about the importance of automating expense management for a while. There has also been a sharp rise in the number of businesses switching to cloud-based expense management software and for excellent reasons!

Here are six of the most important reasons why expense management automation is crucial, especially in such unprecedented times:

Common and equitable application of expenses processes across the organization

Your employees are probably already working from different parts of your state, country, or continent. In such a case, centralizing processes and enforcing policies across the organization is a herculean task. Your expense policies should have or may need to change due to the new nature of business expenses. For example, remote work introduces new categories for employee expense reimbursements.

Strategizing and setting up a new process is only half the challenge; the other half is effective communication of the same to all your employees.

Clearly defined processes and policies are important because:

  • You are still accountable to tax authorities.
  • You need to maintain accurate records for making strategic financial decisions.
  • You must ensure that your employees are updated on any new changes.

How expense management automation can help:

An expense management software automates any custom expense approval workflows, no matter how complex. This makes it easy for managers and Finance teams to tweak/change processes and expense policies as and when necessary.

For example, you might want to reimburse internet bills instead of hotel expenses now that your employees work from home. Just feed it into the policy engine, and the software will ensure effective enforcement with no need of manual intervention.

Once the claims are approved and reimbursed, all expense report data is stored in a secure and unified cloud. This makes it easy for Finance teams to maintain accurate records and access them with ease.

Lastly, an AI-powered expense management software brings all things expense management to a unified expense management dashboard. Finance teams get 360-degree insight into your business’ financial health, and in real-time.

Greater expense policy compliance and employee satisfaction

No matter how much you announce on emails and calls, a policy or two are bound to slip off your employees’ minds resulting in them filing for non-compliant expense reimbursements.

Here are some threats manual data entry and labour-intensive processes pose to compliance:

  • Employees are tasked with memorizing policy nuances and receipt safekeeping if they want to claim for reimbursement.
  • Finance teams cannot process employee reimbursements until they have accurate receipts and compliant expense reports.
  • In the case that a non-compliant expense slips through, it might open your business up to an audit.
  • When multiple minor discrepancies in expense reports slip through, it results in long-term financial losses.
  • Employee satisfaction and trust in the organization takes a hit in case of repeated delays in expense reimbursements.

Employee satisfaction and trust become especially vital in such challenging times. While your employees strive to keep your business operations up and running, you must let them know that you have their backs. An excellent place to start is to devise a hassle-free expense reimbursement process.

How expense management automation can help:

An intelligent expense management software automates policy enforcement across your organization. The software raises flags for any non-compliant expense claims at the point of expense creation and shows which policy that particular expense violates. The employee can then make any necessary corrections or choose to submit the expense with a valid explanation.

Next, once a compliant expense report is submitted, it is automatically forwarded to the assigned approver/manager. This eliminates the need for informing managers of expense report submissions. This also translates into quicker employee expense report submissions!

Imagine how much time, frustration, and costs a simple flag helps save! 

Elimination of manual data entry for expense tracking and report submissions

Traveling and remote employees can incur both physical and digital expense receipts. A shoe box for paper receipts and screenshots all over the phone gallery are not the most efficient ways of storing business expense receipts, are they?

Here are the problems employees face with business expense tracking and submission:

  • Expense receipt safekeeping: This is as problematic to your home-based employees as it is for the ones traveling. Employees might have kids or pets at home, and “my kid drew over my report” or “my dog ate my receipt” can be very valid. However, no receipt means no reimbursement.
  • Expense report submission: Right now, your employees are altering many of their day-to-day responsibilities to ensure there is no disruption work-wise. They always have something more important to do than work on an expense report.

How expense management automation can help:

An expense management software tracks receipts from your everyday apps like G-Suite, Outlook, Slack, text message, or WhatsApp. It also comes with a mobile receipt scanner (OCR), which allows your employees to take a picture of the receipt and store it safely in the cloud. Your employees can make draft reports as they track expenses, and when they’re ready, they can send it to the approver with the click of a button.

This way, employees get more time to focus on the more essential job responsibilities than juggling pesky expense reports.

Reduced turn-around time for expense report approvals and reimbursements

Managers are tasked with managing departmental budgets, making it very important for them to stay on top of departmental/project budgets and expenses. This can be very stressful and time-consuming.

Some issues remote managers/Finance teams face with expense report approvals are:

  • Lack of visibility and insight into employee business spends.
  • Too much time spent manually verifying employee business expenses.
  • Multiple rounds of communication on the status of reimbursements.
  • Chasing employees to submit expense reports.

With an expense management software in place, approvers get the luxury of reviewing and approving expense reports with one click, even from their mobile phones. They can focus on enhancing remote work processes rather than being stuck with reviewing individual expense receipts.

How expense management automation can help:

modern expense management software also integrates seamlessly with your bank portal and the ACH network. This gives you the luxury to process multiple transactions to different employee bank accounts from your centralized expense management dashboard. You can also track where the money is moving in real-time and drastically reduce turnaround time for reimbursements.

Added to making the lives of your management and Finance teams easy, this boosts employee morale and satisfaction. In trying times like these, your employees feel more motivated to work when their organization ensures timely payments and reimbursements. Brownie points for you!

Increased cost control and prevention of non-compliant or fraudulent claims

COVID-19 stressors, both personal and business-related, have increased fraud risk for companies in the US. Finance teams are facing an increased workload, and there is a greater risk of non-compliant expenses being paid.

Here are some problems Finance teams face with staying audit-ready:

  • Lack of real-time visibility into employee business expenses.
  • Manual verification and safekeeping of expense receipts.
  • Lack of paper trails for future verification in case of an audit.
  • Monitoring of wire transfers or ACH payments with external vendors.

If these issues are not dealt with effectively, they will most definitely have unflattering consequences for tax compliance and data security. No business has the time to deal with fraudsters.

How expense management automation can help:

An expense management software comes with a unified and searchable cloud receipt storage. This makes it easy for your accountants/Finance teams to find any given expense receipt with different expense/employee parameters. Additionally, every expense report comes with an attached digital audit trail that contains all details regarding the reported expenses. This helps simplify the entire verification process.

Since the software takes care of policy compliance right from expense creation to expense submission, audit readiness becomes a breeze!

Increased financial productivity with in-depth and real-time insight into spends

One feature that stands out, especially with the uncertainty that COVID-19 has brought upon businesses, is the role of big data and data analytics in ensuring compliance and accurate financial reporting.

Problems businesses face due to lack of real-time and actionable data are:

  • Unreported business expenses.
  • Risk of expense report fraud.
  • Missing documentation.
  • Inaccurate and incomplete insights.

Businesses need high-quality financial insights now more than ever. These insights give Finance teams, management, investors, and board members better control over budgets and a deeper understanding of your business’ financial health and potential risks.

How expense management automation can help:

An expense management software also tracks analytics like top spenders and top violators, across both department and project spend in real-time. These analytics are all available on your expense management dashboard, so you can always stay on top of budgets and ensure compliance – all with little to no manual effort.

Future-proof your business expense management process

Your expense management software solution must automate every step of the process, no matter how complex. For this, finance professionals and business owners must evaluate their existing processes and ask the right questions.

Here’s a handy checklist to understand if your existing expense management process is equipped to handle today’s challenges:

  1. Does it help centralize all your expense management processes?
  2. Does it enable quick and easy adoption of changes in policies and processes?
  3. Does it make tracking and submitting business expenses effortless for employees?
  4. Does it make approving and reimbursing easy for your managers/Finance team?
  5. Does it help detect and prevent expense report frauds and financial leaks?
  6. Does it provide in-depth and actionable data analytics?
  7. Does it help you achieve your financial goals no matter where you’re working from?

If you didn’t have a loud yes for all of these questions, it’s time you started evaluating expense management automation software.

You need reliable processes that won’t break, come what may. You need an expense management process that runs smoothly whether or not you decide to restore normal operations in a physical office.

Future-proofing your business has never made more sense than it does now.

A Enterprise Time Article

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