Its that time of the month again, where employees gather up all their expenses & receipts and begin to create their monthly or weekly expense reports. And in this process, the tool that’s universally used is Microsoft Excel.
Excel-based reporting, although an icon of the past, is still surprisingly one of the most common expense-reporting processes to this day. Businesses that are not aware of the more technologically advanced solutions, often resort to excel based expense reporting (like Google sheets) for their employees.
In this article, we look at the reasons behind why businesses use these templates. Additionally, we try and understand why you shouldn’t use these templates to manage your business expenses. Lastly, we suggest some other easy and inexpensive ways to effectively managing your business expenses.
How many businesses still use spreadsheet-based reporting?
Recent trends reveal that smaller businesses are more likely to use expense report templates. It also suggests enterprises are slowly migrating to web-based or automated expense reporting. Further, a recent Hubspot study shows more details:
“49% of all companies surveyed still use a manual system.”
Out of which, we have the following breakdown between small businesses, mid-size businesses, and large enterprise businesses using Excel/spreadsheet-based reporting:
Small businesses having the highest share is no surprise. There are three main reasons for that:
- They have no/limited awareness of better solutions
- Lack of budget and resources to move to a new platform
- Not able to align their business with the benefits of other solutions
These reasons play a crucial role in them adopting freely available Excel templates. These templates are widely used, but are they good for your business? Let’s find out.
The convenience of templates and why companies use them
Excel and similar spreadsheet applications are versatile tools. They are useful for many things, and expense reporting is one of them. Some of the common expenses that businesses manage using templates are travel expenses, per diem expenses, and business mileage tracking. It’s an easy solution for businesses as everything is set up already.
The top 3 advantages of using expense report templates are:
- A simple and readily available solution
- Templates are designed to be easy to understand
- These templates are free and easy to modify
Main drawbacks of Excel-based reporting
- Slow manual entry: Employees need to manually enter information from receipts into various expense categories in the template. Although it’s all laid out for them, they need to fill out many categories like total amount, expense type, time period, and business purpose. This makes the process of expense reporting a tedious one. Additionally, different business expenses may have different expense report templates, which makes it even more confusing. This results in employees getting burned out from having to shift all their focus into this task rather than their more meaningful work.
- Highly prone to errors: It’s easy to commit mistakes with manual data entry. Additionally, expense report templates do not come with anything to prevent incorrect information from being entered into them. This causes significant problems as finance teams will need to continually backtrack when they discover something wrong in the expense reports. That leads to delayed reimbursements for employees. This leads to a decrease in employee productivity.
- Disjointed data: Excel and other sheets are useful for creating expense reports, but how do finance teams take action on them? If they need to approve an expense, they need to consult other accounting software and take necessary actions. In case of policy violation, they need to slowly find and flag an expense as non-compliant. Once done, they must consult their expense policy and go back and forth with the employee trying to figure out why the expense was made. Additionally, it is difficult to extrapolate any meaningful insights into spend trends. This could lead to bad business decisions.
- Easy to manipulate: Employees and accountants sometimes make genuine mistakes. But what happens when they do it on purpose? One of the most significant disadvantages of Excel/spreadsheet-based expense reporting is the complete lack of any security measures/protocol in place. These sheets mostly have zero indicators of how each expense was duped or changed. This decrease in compliance leads to fraud and can majorly impact a business.
- It is only until comprehensive audits take place or when you have an expense management software that can detect these non-compliant expenses.
Why switch to an automated expense management solution?
Now that we have covered the various disadvantages of Excel-based reporting, we look at the solution to these problems – An automated expense management software.
The survey by HubSpot suggests,
63% of small businesses that switched to a web-based expense management system reduced or eliminated their use of Excel spreadsheets for expense reporting.
70% of small companies identified simplicity/ease of use as an essential feature in a web-based expense management system.
This goes on to prove the growing demand for such a solution. Additionally, an automated software eliminates one crucial factor, and that is human intervention. New expense management solutions come with advanced features that utilize AI and machine learning to provide a simplified but secure expense reporting process.
One of the common doubts small businesses or startups may have is that it might be too expensive. However, thanks to the flexible pricing models of these cloud-based solutions, they are very cost-effective.
How can Fyle fix your expense management processes?
Excel-based reporting is loathed and hated by employees all over the world. It’s time-consuming and aggravating when dealing with many receipts and expenses. In this process, it’s not just the employees suffering, it’s also the accounts team and all the approvers.
At the heart of this reporting are many employees depending on expense spreadsheets. These templates come with pre-made categories and save some time. There are loopholes; as it’s easy to commit mistakes, and it’s tough to extrapolate any insights from these types of expense reports. Not to mention that it’s also another place where employees can manipulate and enter fraudulent expenses. Templates don’t do anything to prevent these actions from taking place.
Fyle can help put an end to your accounting and expense management woes. We not only reduce work for all stakeholders but also keep your accounting books spotless and audit-ready. Some noteworthy features that our customers seem to love are:
- Automated receipt management
- Automated policy enforcement
- Travel expense management
- Travel management and Accounting software integration
- Whatsapp and G Suite integration
- Receipt scanning app for employees
- Detailed expense analytics for admins
Schedule a demo today and let us do the heavy lifting while you focus on making your business scale!