Expense approval seems effortless on the surface.
The secret lies in a click of the button. If you are still doing it on paper (which you shouldn’t,) a signature is all it takes.
As a finance executive, you are already knee deep in paper-work. You need to prepare the financial statements, handle budget planning, prepare revenue forecast and so on. Among such tasks, usually, expense report reviews are down the priority list. When you are reviewing and approving heaps of expense reports daily, you may overlook a few violations here and there. We understand it is not intentional. Although the mistakes in expense reports doesn’t seem like a big deal initially, it could lead to a massive loss of money for the company in the long run.
In this article, we discuss the importance of expense report review and approvals. Further, we consider the key factors one must keep in mind to efficiently review and approve expense reports submitted by traveling employees.
Why is it necessary to review and approve expense reports?
A growing business has an innumerable amount of business travel expenses. Employees travel from one end of the globe to another, meeting clients and closing deals. The finance team has to account for all these expenses to keep track of the T&E expense budget and allocation. Therefore, timely submission becomes important. Often, salespeople forget to submit their expense reports on time, keeping it for later. As a result, the finance team has to send multiple emails to remind them of expense submissions. This translates into additional work for the finance folks.
After submission, all the expense reports come to the finance executive’s desk, waiting to be processed and reimbursed. It is unwise to process the payment without reviewing the expense report. For example; If the employee has included $250 dry cleaning charges as a part of lodging, it is an unreasonable spend that should be discouraged and rejected. These errors come to your attention only when you review them carefully.
Based on a report by GBTA, on an average, 19% of the submitted expense reports are ridden with errors. As a result, finance executives have to spend close to 18 minutes to processes an individual expense report. It further leads to delay in reimbursement, causing frustration among employees.
On the other hand, you can implement a review and approval process that makes work easier for the finance team. You can include multiple stakeholders in the approval process, who are well aware of the policy limitations on each type of expense. They should be able to spot policy violation while reviewing the expense and send them back to the submitter if need be. It ensures that the company does not lose money due to inefficient review. At the same time, it reduces the burden for the finance team, who can now focus on timely reimbursements.
Who is responsible for expense report review and approval?
Typically, traveling employees submit their expense reports to their reporting managers. The reporting manager takes a look at the expenses, reviews the receipt, and checks if the expenses are within the policy limits. Managers then forward the expense report to finance executives for further approval and reimbursements. Once the executive reviews it, they send it to the finance manager for the final green to process payments.
In some cases, the approval flow might have some exceptions. To understand this further, let’s take an example:
Lucy works in the marketing department of ABC corporation. She usually submits her expense reports to her reporting manager, Sally, who then forwards it to the finance team for payment processing.
However, when Lucy has to handle marketing activities for a Finance summit that her company hosts, her expense approver changes. At this point, any expense report that Lucy creates, goes to Rebecca, the event head, and not her reporting manager.
Things approvers should keep in mind while reviewing expense reports
When you decide to streamline the expense report review and approval, you must educate your managers on your organization’s expense policy. They should be able to encourage compliance among their employees. Employees should be able to remember the policy caps and specifications for each type of expense. Here are a couple of things they need to keep in mind while reviewing an expense:
- Encourage your employees to report expenses within a specific time.
- Associate receipts with expenses mentioned in the expense report. Although IRS mandates receipts for expenses above $75, it is better to ask for receipts to avoid fraud.
- Review if the receipts correlate with the details mentioned in the expense report.
- In the case of restaurant receipts, check if the tips paid are within the stipulated guidelines. Also, if your company does not reimburse alcohol expenses, ensure that the expense is excluding the alcohol charges.
- Let your employees know if you find any policy-violated expenses.
- In case of mileage per-diems, check if the rates mentioned in the report tally with the IRS rates.
- Now and then, get in touch with your customers to ensure that your employees indeed made the sales call.
- For mileage expenses, do check if the travel was explicitly for work.
Following these pointers would enhance policy compliance and control. At the same time, it will also accelerate the reimbursement process. To make this process is entirely effortless, adopt an automated expense management solution like Fyle.
How does expense report review and approval work in Fyle?
Fyle provides a seamless approval experience.
Employees receive email reminders to submit their travel expenses on time. They can submit their expense reports either using their cell phones or using the web application.
Approvers receive real-time notifications on expense report submissions. Fyle flags all policy violated expenses, as a result of which review becomes easy. All they need to do is click the ‘Approve’ button.
No matter how complicated your approval workflow is, you can handle them with ease in Fyle. You can include as many approvers as you like and customise them based on policy changes, projects, or hierarchy. After the approval process, you can automatically send it to the finance team for payment processing.
It is much easier than it sounds! Try it for yourself with Fyle.