Are you a business that uses an expense report template to manage your business expenses?
The desktop era gave rise to the use of templates to manage almost all our daily activities. Be it for tax purposes, managing personal expenses, or even our meals. There was and still is an Excel sheet for everything. And, thus began the era of the expense report template. Using expense report templates to manage business expenses has been a long-dreaded excuse for cutting costs.
As per a study conducted by Levvel LLC, it shows that 62% of the employees still use manual entry and routing of expense reports. Does your business use such a template as well? In this article, we try to persuade you to pick otherwise.
The world is rapidly evolving. With the shift towards technology, today, we can automate and forget about managing our mundane tasks. Expense management is no different. Expense management has also evolved from being a basic expense report template to a seamless one-click experience over the years.
Here’s everything you need to know about why you shouldn’t be using an expense report template to manage your business expenses. Let’s dive in!
What is an expense report template?
An expense report acts as a summary of all spends incurred by a traveling employee for a specific business trip or business expense. It tries to streamline, standardize, and remove subjectivity from all business expense reimbursements.
On a quick search on the internet, here are some common finds for expense report templates: free Excel expense report template, download expense report template, Spreadsheet expense templates, and so on.
Most businesses who want to address their expense management woes start with downloading an expense report template. This is a readily available template created by a third party who has no idea of your business needs. It covers the mandatory requirements that need to be met to streamline your expense management.
Here are the types of printable expense report templates used:
- Travel expense report template: A template to log in business expense claims
- Mileage report template: A template to log in mileage entries
Why do companies use expense report templates?
Your corporate traveling employees are always on the move. Their efforts directly impact the growth and scale of your business. On these business trips, they need to make payments for a variety of business expenses. Some of the typical business expenses on a business trip are food, accommodation, transportation, fuel, and others.
Every organization uses a template that adapts to their business goals. They further use this template as a mode of documentation for all T&E expenses.
Some of these expenses can be handled beforehand, such as hotel and flight bookings. While, for the others, the employees need to make upfront payments to avail the desired services. These payments are made via corporate credit cards, prepaid cards, travel allowances, or by employees using their own money. These expenses fall under the category of business expense reimbursement.
Advantages of using a free expense report template
- It is a simple and readily available solution to address immediate expense management challenges.
- It is an easily understandable template as employees are well-versed with tools such as Word, Excel and Google Sheets.
- Everyone understands simple functions such as cut, copy and paste to manually enter data into the expense report templates.
- Immediately adopted by employees, thereby saving time without assisting them to understand how it works.
- It is free of cost, at least if you begin to assume there are no hidden costs: both quantitative and qualitative.
Expense report template: What businesses shouldn’t use them?
An expense report template can affect the decision-making capacity of the business:
In the study, respondents state the major pain point they faced while managing expense claims submitted via expense report templates. 42% of respondents stated they were unable to gain insight into the spending trends and patterns of the company.
Numbers should always back business decisions. Based on the insights businesses gain from their T&E expenses, they can identify and contact frequently associated vendors. For a company that focuses on harboring national and international clients – its sales team is expected to travel often. Striking deals and discounts in such cases can help save loads of money.
Also, employees need to fill expense report templates manually. The larger the number of employees filling in the expense report template, the higher the subjectivity. This subjectivity further translates into the diluting of data, thereby resulting in poor quality data. Bad data translates to bad numbers. As a result, bad numbers always translate to bad business decisions.
An automated expense management software addresses this challenge by allowing for integrations. With these integrations businesses can access, transfer, and analyze expense claims in just a few clicks. This will enable them to make well-informed business decisions.
How an expense report template causes a deterioration in the quality of data:
- Missing data: This happens when employees claim for expenses without attaching receipts to validate claims. This can also occur if employees lose their receipts. When there is no corresponding receipt attached for an expense claim, approvers need to understand the nature of the spend. Further, if the approver approves the claim, there is no documentation for it.
- Inconsistent data: This happens when the information on the expense report doesn’t match the data on the corresponding receipt. This mostly happens due to errors in manually filling expenses. This can be done either as a genuine mistake or as a fraudulent claim trying to get past the approver. Minor leaks such as these prove detrimental to the health of the business in the longer run.
- Overexaggerated/duplicate data: This occurs when employees try to slip in a few duplicate, or fraudulent expense claims to make a few quick bucks. Identifying, isolating, and gathering proof for such a claim when done manually, is cumbersome. This results in a decrease in compliance and the employees getting away with fraudulent behavior.
- Disconnected data: This happens when approvers and verifiers need to toggle between multiple applications to access (submitted expense report) and validate expense claims (receipts stored in DropBox or Google Drive.) Unlike in an automated expense management software, expense report templates do not provide for a centralized dashboard. Automated softwares allow approvers to manage all expense claims with corresponding attachments under one platform, thereby saving time and money.
An expense report template can decrease compliance and increases fraudulent behavior:
While manual errors in the expense report template may be out of sheer neglect, it would still require your finance team to tend to it. This results in them wasting more time processing a single expense report than approving a hundred, if they were using an automated system, instead.
Why should you consider making the switch to an automated expense management software?
In the study, respondents react to what are the significant benefits of using an automated expense management software:
- 71% of the respondents said the primary benefit of using an automated expense management software is an improved reimbursement process for employee expenses.
- 41% of the respondents reported an automated expense management software helped improve communication between the management and staff.
- 66% of the respondents stated that they got better visibility into the company spends after making the switch.
Are you convinced to make that shift?
Fyle does more than just streamlining and easing out your expense reporting and expense management! Request a demo, if you want to put an end to your expense management woes.