With globalization, it's not uncommon to see an organization operating with several business units or offices across the country or even globally. With this growth spurt, it is vital to handle expenses effectivity to maintain the financial health of an organization.
For this, organizations may end up using an ERP or enterprise resource planning software. These solutions help with business processes, accounting, budgeting, and more. However, they are difficult to customize according to business needs. They may also lack features that allow for more advanced options and decision making.
ERPs do not come with features like expense tracking or digital audit trails. Further, they do not eliminate manual expense reporting as well. This is why enterprises have started to make the switch to more advanced cloud-based solutions.
In this article, we jot down the steps you can take to improve your current expense management process. Additionally, we also discuss how you can implement an expense management software to modulate expenses. Let's get started!
How do businesses with multiple units manage global expense management
The new age of expense management contributes a great deal to mitigate the issues faced by employees and the business around employee expense reimbursements. But how do they fare when they need to deal with companies operating across multiple units in perhaps different countries altogether?
Businesses that operate globally or across cities may have many issues in their expense management process. Hence, it is important to outline these issues when conducting an ROI report on your current expense management software.
Challenges of managing global expense management
- The finance teams need to go through various dashboards to accommodate expenses: This is because their current solution or process does not correctly address this aspect. It can also be a lack of features when dealing with multiple business units across the globe.
- A significant amount of policy violations: Finding an expense management software that can provide seamless expense reporting and approvals can be complicated. Policy violations like these happen due to currency differences, ineffective policy enforcement, and different accounting systems. Incorrect expense claims can lead to recurrent non-compliance, which will degrade the legal reputation of the company.
- No insight into company spends and limited data analytics: Larger corporations rely on analytics to make high-level decisions and to map out budgeting plans. These businesses often need to consult a separate firm for this or use another software entirely. This increases the overall time it takes to make critical decisions and can affect the financial productivity of your business.
Why should businesses create a multi-threaded expense workflow?
It's simply impossible to keep track of dozens or even hundreds of employee expense reports every month. This is why it is essential to add structure to the nuances of expense reporting and processing.
Here are some ways we can do that:
- Create a hierarchy in expense approvals to make sure the expense reports go through the correct departments. It may become a habit for lower-level managers to approve expenses without actually checking them against the policy guidelines. Additionally, issues around tax regulations can crop up if there isn't a higher-level manager to approve expenses.
- It is vital your finance team possesses some form of tracking expense audit trails. This is very important when you have business units globally. Expenses may slip past your set guidelines or policies when you cannot correctly trace them. Additionally, ensure you make accommodations for countries that may have their own regulations.
- Automate expense audits to reduce the burden on your finance team. Automated expense audits can only happen when using modern expense management softwares. If a business only audits after the expenses were made and approved, then they may discover discrepancies and even fraudulent expenses. By automating the audits to happen at the time of expense, you can remove the chances of incorrect or non-compliant business expenses being approved.
- Find a way to obtain analytics/insights into expenses regardless of the region. Your finance teams can compile detailed data in their analytics reports to give a much greater understanding of numerous KPIs like policy violations, spend trends, settlements, and more.
- Customize and fine-tune policies to accommodate other regions and business units. Identifying issues and loopholes in the expense reporting and expense approval process and modifying your expense policy can dramatically increase your financial productivity.
Crafting policies that cover global businesses
When drafting global policies, you must account for the respective regions where you operate or where your business units reside. Local laws often differ from state-to-state or country-to-country. Conversely, your policy must also alter based on the region your business operates.
Best practices to follow while drafting global expense policies
- Your policies may contain information which is applicable either globally or for specific countries. Ensure you mention both these instances as explicitly as possible.
- Expense rules are not always the same; they may differ based on departments, types of spends, designations, and more. Ensure you include such instances to cover all your regional regulations and norms.
- When tax is concerned, there may be different types of tax levied on individual expenses, depending on the territory. Make sure all the expenses adhere to the specific region's taxation rates.
- Where reimbursable expenses are concerned, you must define what reimbursable expenses are and what becomes taxable income to the employees. Ensure you educate your employees on the types of taxable expenses, set rates, and under what circumstances they can claim such expenses.
- If you use a travel and expense management solution, it must accommodate the changes you have made to your expense policies. Picking a solution that can easily modify policies in the software and automate expense reporting and approval process is ideal.
How does Fyle provide a seamless global expense management experience?
Whether you have multiple offices around the country or even the globe, Fyle helps your business get past all your expense management hurdles!
With Fyle, finance teams can use a single dashboard to control all their company expenses regardless of the region or business unit. Our multi-level workflows ensure consistency across all business units. Also, our automated approvals and policy checks ensure all business expenses are 100% compliant. Thus, providing a wholesome approach to efficiently managing business expenses.
We are a pioneering global travel and expense management solution here to put an end to all your expense management needs. Explore Fyle, by scheduling a demo today!