Make Receipt Management Digital - Fyle

Paperless reimbursements – Does your software truly make receipts digital?

Originally announced in 2015, Making Tax Digital aims to digitize the UK’s taxation system through the use of digital records and online filing through compatible software. As the deadline for the same comes closer, most businesses are still unsure about what  needs to be done and how.

The UK was not the first one to do this. Poland recently announced the abolition of VAT returns from the beginning of 2019. Trends and forecasts from multiple sources suggest going digital for  tax and accounting purposes now seems inevitable. A significant component of this is making sure all your business expense receipts and reimbursement proofs are available and auditable digitally.

While  businesses  these days use a cloud-based solution to achieve 100% digital process, very few have been able to successfully do it. This happens either due to limitations in your expense management software, or poor implementation of the processes within the organization.

In this article, we will explore some of the most common challenges finance and accounting teams face with reimbursements. Additionally, we will understand some of the best practices to overcome these challenges by using the right software for your organization.

How software and process hinder your T&E digital transformation

35% of companies ask their employees for paper receipts to support their expense claims. This is after almost every compliance and/or regulatory body across the world, encouraged businesses to refrain from paper receipts. This was done to reduce the carbon footprint and encourage paperless transactions.

Let’s look at how business processes are responsible for cases where this happens:

  • Your business still uses paper-based expense forms or expense sheets
  • Your company still requires a hard copy for receipts

The solution to process limitations here is straightforward. The finance and accounting teams in no way should entertain paper-based forms, sheets, receipts or any other reimbursement related proof. Businesses can make it even easier for their employees by accounting as per the latest compliance guidelines changes (like IRS announcing that receipts for business expenses below $75 need not be supported with receipts.) Additionally, it is crucial to keep updating your expense policies continually.

For businesses that have acknowledged the process problems and have made digital uploads mandatory, the next set of issues are presented by software limitations.

Some of the most common software limitations are:

  • The software doesn’t allow the upload of soft copies. This mostly happens when you manage expenses on a spreadsheet-based system.
  • The software allows for an upload, but there is no easy way for employees to scan them. This is one of the most common complaints by businesses using legacy T&E software.
  • The software allows for an upload, but employees face problems in a few cases. The most common hurdles are email receipts, where employees are forced to print and scan receipts. With more than 20% receipts in their inbox, employees should have an easy way to submit these receipts.
  • Software allows for online report submission and approvals but doesn’t provide receipts attached to the report. This forces employees to print receipts and submit them separately.
  • The software doesn’t handle policy violations by itself, so employees end up filling paper forms, instead.
  • The software doesn’t allow for online approvals and rejections of reports. This forces employees to submit hard copies to their approvers.

Some of these problems might be due to inefficient utilization or poor adoption of your T&E software.

If your problem is the latter, we strongly recommend reading our step-by-step guide to automating travel & expense management. This guide will help you in building the right processes backed by a capable software.

Other than the apparent poor implementation of digital T&E, keeping reimbursements on pen-paper poses a much more significant threat to your compliance efforts.

Here are a few consequences to keeping a manual record for expenses:

  • Fraudulent claims and duplicate bills – Manual policy checks on receipts see significantly higher fraud leading to reimbursement of fraudulent claims or approval of duplicate bills.
  • Poor policy compliance – Manual checks for policy compliance are time-consuming and strenuous. Softwares flag policy violations on bills with higher accuracy than humans doing manual checks.
  • Time consumption – Digital checks drastically reduce your reimbursement turnaround time. The cost-benefit of man hours saved is a sizeable saving for businesses.
  • Vulnerable records – Managing paper receipts physically is expensive. It can lead to irreversible damage to tax and reimbursement proofs. This could prove detrimental to the health of your business.
  • Unusable data – Paper receipts disable teams from making sense of the valuable T&E data in hand. Insights from this data can be utilized for better policies and reimbursement structures when information is digitally stored.

The list goes much longer, but the above points make a compelling case for evaluating your current setup. It can also provide you with enough insight into whether you should make the switch to an automated receipt and expense management solution.

Making reimbursements truly digital with your software

In this section, we will talk about putting some common expense management software features to make reimbursements truly automated while ensuring all your receipts are digitized and audit-ready.

Customize your reimbursement software and receipt collection

Many admins usually have to build processes on top of their expense management software. This is because they are unaware of the customization features that are offered by softwares. A typical example is when businesses want to capture more fields for every receipt submission.

Let’s look at the three main customization options that will solve such problems for you:

Use custom expense fields and categories to create a comprehensive receipt form

Most receipt management solutions allow you to define and add custom fields to the expense form. The use case can be when a business has custom categories for accounting, or when they want to know if an expense was made on a corporate card or personal card.

Use custom employee fields to make sure your expenses are well attributed

Almost every organization has a unique hierarchy and organization structure. This often leads to a poor fit between the default employee details available in your software. To help address these challenges, you can create new properties for every user. These properties can be for office location or their seniority level. Filling in these fields ensure that your business spends are well attributed.

Use projects and cost centers to understand business spends better

Most organizations have ‘cost centers’ defined to understand the spread of their overall expenditure. These expenditures can be for customer events, office stationery, marketing spends, and more.  A very close requirement can be when you need to track expenses by projects. This feature is particularly beneficial for nonprofits. Your software can easily associate receipts with these cost centers and/or projects. This can help you organize your expenses with these respective tags.

Increase adoption by making receipt submission easy

The most obvious reason for employees not submitting receipts on time is that it’s a tedious, manual process. It’s pivotal to understand receipt catchments and make it easy for employees to submit receipts without needing a physical copy of the same.

Here is how you can do so:

Submitting receipts directly from the email inbox

Some of the top receipt management software allow you to forward email receipts to a particular address for immediate submissions. You can encourage employees to do so, to improve productivity and completely eliminate manual entry. However, the accuracy of this method has always been questioned by users. In such cases, we recommend you can look at other software that can provide apps for tracking expenses inside the email inbox.

App to scan paper receipts & track mileage

Paper receipts still form a large part of employee expenses. They continue to be the biggest hurdle when trying to automate and digitize receipt management. To address this challenge, opt for a software that provides a free app to track employee expenses.

Build robust expense report approval workflows

Most expense management softwares have a module to create approval workflows. It’s common to see an option of assigning one approver per employee, which might work for smaller businesses. The gap lies in how complex and customised those approval workflows can be. Hence, for companies with more than 50 employees, answering the following questions might be helpful before zeroing down. Once done, check if your software can create these custom flows for you –

How many approvers need to review an expense report?

Most companies have a one-level review process with the direct manager responsible for approving expense reports. However, in our experience we have seen that businesses might want to have multiple managers as approvers. In addition to these managers, finance and account teams are also kept in the loop as part of the review step.

Understanding approver sequences – Parallel or Sequential?

Most of the times, an expense report needs to be approved by every assigned reviewer. Some businesses may prefer a sequential approval process. This occurs when you want the expense report to move to the next approval stage only after the previous one is completed. In such cases, you can setup sequential expense report approvals.

Automate policy checks

The last step before finalizing reimbursements is to ensure that expense claims are compliant. Automation of the above steps makes no sense if your software can’t ensure 100% compliance. Some of the added benefits of automation is that the software also automatically runs real-time policy checks and flags expenses with policy violations. This further improves compliance.  

But, expense policies can be hard to set up. While some software may require you to manually check for policy violations, others allow you to create very complex policies utilizing receipt, report, employee and many other properties (default and custom, both).

The power of true automation

With the world going digital, it becomes increasingly essential for businesses to keep up with the current trends. Automation serves this very purpose. With redundant tasks being effortlessly automated, employees and finance teams can spend their time effectively, on things that truly matter. Additionally, with an automated expense management software that can provide real-time policy checks, detect duplicate and fraudulent bills and more. Businesses can now ensure an increase in RoI, productivity and efficiency.

In case you’re an admin at an organization with more than 50 employees, the whole scope of automation can be overwhelming. In case you’re looking for support in building these processes, do schedule a call with us. Fyle provides concierge service for setting up and implementing robust expense management processes. We’d love to help!

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