If you are using an expense management automation solution, then you must be well aware of the benefits it brings with it.
The reliable, automated system allows employees and managers to free up their schedules that would have otherwise been filled with manual work. Manual work in the form of creating expense reports, shuffling for the expenses incurred that month and more.
What do businesses using expense management software have to say?
In fact, 42% of companies have agreed that automation helps in reducing the time spent in creating and approving expenses. An astounding 92% of the companies are achieving a full return on investment in two years or less. This only goes to show that the system is worth the resources put into it.
Although companies are gradually welcoming automation in expense management, the real potential can be unlocked only when you prepare your business for automation.
Here are a few effective practices to address your expense management challenges:
- Collect Relevant and Required Information
Some companies do not acquire sufficient information from employees while tracking expenses. This increases manual work for accountants and managers who have to chase employees. This would account for the loss in many productive hours, which could have been spent otherwise. On the other hand, asking employees for too much information will only make expense reports confusing and frustrating for them.
Some of the must-have’s while collecting information are:
1. Time of expense
2. Place of expenditure
3. Vendor details
These details can help companies gain insights and avoid fraudulent practices. Technology is now capable of automatically extracting expense related information from scanned/photographed receipts, emails and most of the other forms of receipts.
While the meta information is useful, it’s also necessary to keep track of the changes made by user, approver or the automation engine in a receipt after it is claimed. Solutions often allow managers to follow up on suspicious expenses and will enable employees to provide explanations when needed. Having a trail of all activities right from claim to reimbursement can be used as indicative or predictive pointers for behavioral insights into your workforce – and can be used as input to your HRMS modules as well!
- Have a Simple and Clear Expense Policy
Follow the principle of quality over quantity. Think of your expense policy as an informative document rather than a 30-page book. It is highly probable that no employee will make an effort to go through your 30-page expense policy. Even if they do, it is almost impossible for them to remember every single policy. All your policy needs are brief, yet enforceable points keeping the most critical sections in mind.
Your expense policies should primarily include:
- Reimbursable and non-reimbursable expense categories
- Upper and lower limits on expense claims
- Team-specific, project-specific or role-specific criteria for reimbursements
- Time boundaries on expense claims
- Pre-defined mileage rates for all vehicle types (cars, medium-sized vehicles, cabs)
Ensure employees are aware of this shorter and much simpler expense policy and strictly abide by it. The rest can be taken care of by enabling synchronous policy checks on your expense management software. Companies can feed in their policies and employees will be notified about policy-violating expenses in real time. The edit history can also help managers and finance teams view the audit trail and be on the lookout for any fraud.
- Reimbursement On Time
Automated expense management systems come with powerful features like claiming expense from your emails and using the smartphone app to scan paper receipts which allow quick and easy expense reporting. However, some employees still forget to record purchases as and when they have made them.
Organizations should give their employees a specific time limit to report expenses. Having a deadline will avoid following procedures of late submissions, thereby resulting in hitting the employee’s wallet.
The expense software not only sends scheduled reminders and emails to employees for filing expenses but also makes it possible for managers to approve these expenditures punctually through notifications. This way both employees and managers are more prompt with their duties. It also inculcates good practice by boosting employee morale and productivity. The system helps eliminate any complications in the operational procedures and enables the company to maintain a fair setup.
- Analyze Trends and Take Action
It is essential for businesses to use the analytics feature that comes with most expense management software. The categorized spending chart will help finance folks understand which section has the most amount of costs and whether it is a wasteful expenditure or not.
If in case it is, the company can take a call on budget cuts. Make sure your company reviews the expense policies from time to time with feedback from expense analytics. Additionally, finance admins can incorporate any changes that have been made and publicize it to employees.
The company can further drill down the analytics to individual-level insights and let employees know where they need to curb their expenditure. This encourages transparency by giving your team accurate data and numbers. It will further help you pinpoint preferred vendor relations by going through expenses specific to them. This keeps fraud in check and gives the organization a competitive advantage.
Why businesses like you, need efficient expense management software:
Research shows 71% of employees are likely to switch employers if they are not reimbursed on time.
With the adoptions and consistent utilization of the above best practices, companies have already reported a 91% increase in compliance rates. Organizations can further save a lot of time and money along with accelerating employee satisfaction. With effective handling of expenditure, timely revision and strict enforcement of policies, companies can always stay fraud-free and audit-ready.
Fyle promotes the use of these best practices. Our features are custom-built to address your expense management challenges.
Are you looking for an expense management software that does the thinking for you? Start your free trial today.