Did you know that the business expense report your employee submits has an unlimited amount of data for analysis? Are you listening to what the numbers are trying to say?
Your employee can incur expenses during business trips, client meetings, conferences, or on office supplies. Whatever the business expense, it is essential that you keep tabs on the expenses.
According to the Aberdeen Group report,
“52% of the leading organizations automate key components of their expense management.”
Additionally, leveraging this data from the expense reports can provide you with valuable knowledge about employee expenses, vendors, top spending categories, and more. This article details the nuances of a business expense report. It also sheds light on the hidden costs incurred in manual expense reporting and how automation helps solve the problem.
A business expense report is a form detailing all the business expenses incurred by an employee on a business trip. Once back from a business trip, an employee is expected to submit these details in the form of a business expense report to the finance teams. On verification and approval, employees get reimbursements for their expenses incurred on a business trip.
Employees are expected to file their reports within a specific time-frame for reimbursements.
If a report violates a policy or requires clarifications, it may get withheld, causing delays in reimbursements.
Simply put, any purchase made by the company or an employee on behalf of the company is a business expense.
A business expense is the money an organization spends to run a business or to carry out its operations. These payments can include transportation, payment to suppliers, accommodations, gas, etc.
Companies spend money on business travel and other expenses for business growth and expansion. While this may deliver returns, manually reporting and processing of business expense reports can cut the returns short. It may also limit profit, growth, and revenue.
While money is an attribute that helps add a quantitative value to this equation, variables like time, resources, workforce, employee morale, and productivity are often ignored. Here's how traditional expense management qualitatively affects your stakeholders:
All these factors put together over prolonged periods of time can result in a drop in employee morale. This could further translate to decreased employee productivity as they would no longer want to travel and lose money on business trips.
Managing business expenses are no easy ordeal. It requires you to not only ensure you always stay IRS compliant but also fair to your stakeholders. These expense reporting tasks could easily be automated to spare your employees time that they could utilize otherwise.
The finance teams and accountants get the worst end of the straw. Here are some ways your finance teams may be wasting their time and productivity:
All these factors put together, translate to increased workload for all stakeholders involved. Additionally, even after all of this, you still seem to lose the battle against expense management.
Moreover, there is a high risk of fraud in a manual expense reporting process. It is also challenging to ensure compliance with company travel and expense policies.
Business expense reports may be a tedious chore, but it is a necessary process. Regularly generating expense reports can ensure your company is financially secure. It can also help you understand where the majority of your money is spent. It also helps to check if the expenses are within the defined budget and if you’ve incurred any losses.
Let’s look at how your business can benefit via insights through numbers:
The inputs from expense reports can be used to make positive changes for the business. Expense reports give your team insights into what, where, and how the company’s expenses are made.
By accumulating expense reports, you can identify which strategy or activity of your employees are bringing in profits and costing less. Be it lunches with clients, business conferences, telephonic conversations, or in-person service, optimizing costs is always possible. Additionally, utilizing this internal resource aids, you to handle various strategic issues, project management methods, and help implement strategies and improvements.
An expense report is an excellent source to measure if certain expenses are bringing in profits or costing you more than it should. Expense details filled in by your employees, such as subtotal, grand total, and amount spend on a specific category, are all numbers you need to pay heed to. By identifying how much money is poured into a project or department, tweaks and improvisation can be made for maximum profit.
The expense report submitted by employees is a bundle of information. By assessing it carefully, you can identify which suppliers, airlines, or hotels your employees prefer. You can calculate, on average, how much your employees would spend on office supplies, gas, meals, etc. It can also help you identify which department is the top spender and on average, how much an employee of a certain level spends. This gathered data from the report to help your finance team budget and plan better.
An automated expense management software helps streamline every aspect of the expense reporting process. It also helps curb expense fraud and maintain internal policy compliance. Here are ways an automated expense management software can help:
Companies carefully calculate business expenses for growth and profitability. For this, effective measures to manage resources, overhead, and visibility into spending are essential. Automating expense management is an opportunity for businesses to accomplish these objectives.
Business travel and expenses are essential for the growth of companies. But the return on business travel investments and opportunities for growth can be limited by manual expense reporting processes. The main goal for any business should always be to maximize profits and boost revenue while also keeping its expenses in check.