Most small scale businesses often don’t pay heed to the critical role policies play in managing expense management. Often neglected as a time-consuming process, businesses risk putting their entire business at stake.
A recent study on business travelers by GBTA, indicated:
44% of employees stated they had to follow expense policies while reporting expenses. A whopping 21% of business travelers said they don’t have any restrictions in terms of creating or reporting expenses.
These numbers are only indicative of the fact that businesses tend to stay wary of policy creation and enforcement.
Engaging in other business processes without paying heed to policies and data analytics, could prove detrimental to the health of your business. This article will help you understand the vital role played by these variables in the efficient, smooth functioning of your business.
Why do businesses tend to avoid policy creation and enforcement:
The cost involved and the time it takes to draft these policies are some of the leading reasons why businesses avoid them. What most companies tend to forget, is the fact that the cost and time involved in creating and enforcing these policies, will help the business in the long run.
Having effective policies help define, detect and curb unnecessary spends. A crucial point that every business needs to understand is the power of effective communication. It helps in faster and easier adoption of policies, thereby also resulting in increased compliance and decreased policy violations.
Why should businesses take policy creation seriously?
- Insight into spending trends: Setting defined parameters in terms of airfare, hotel, food, and transportation help add a sense of clarity to employees when making or reporting expenses.
- A decrease in unnecessary spends: With policies which inhibit and curb unnecessary spends, businesses can identify and stop these spends at the source.
- Organize and streamline processes: Traditional means of expense reporting require employees to spend productive hours collecting and compiling expense reports. Today, with automated expense management softwares, employees can now report expenses, on-the-go.
- An increased Turnaround Time (TAT): With defined metrics to accept or reject expense claims, there is a visible increase in the TAT for reimbursements.
- An increase in compliance: Policies play a crucial role in maintaining compliance and streamlining the entire process of expense management. With real-time insights into policy violations, businesses can be sure to remain compliant with travel policies.
- Operational inefficiencies: Most times, HR and finance teams have little to no insight into spending trends. This further results in the management taking ill-informed decisions which can impact the growth and scale of the company.
What happens when employees don’t have clear policies?
Employees are often never aware of policies. The limited knowledge they have about travel and expense policies are due to them or their friends falling victim to policy violations. Often, employees are not even aware of what is acceptable or not, when it comes to business spends.
This results in the management staff spending hours sorting and validating spends. With automation, employees and management teams get real-time updates on policy violations. This results in saving time for both employees and management teams.
If businesses use traditional means to manage expense management, employees are bound to commit multiple policy violations. This, in turn, results in a decrease in employee satisfaction and morale. Having well-communicated policies with traveling employees help provide benchmarks to help them analyze spends even before creation.
Benefits of using effective policies in expense management:
- Streamlined and defined processes to manage expenses
- An increase in policy compliance
- A decrease in policy violations
- A reduction of fraudulent behavior
- Insight into spend trends, spend categories
- Information on most frequent spenders and vendors
With this in mind, we hope you are now able to understand the importance of having an effective policy. This not only helps add an increased layer of transparency and visibility but also helps boost employee compliance and morale.
Now that we have our policies in place let’s try to understand the role of data analytics in expense management.
Why does data analytics matter in expense management?
Data analytics drives everything. Even Expense Management.
Growing up, we all dreaded report cards. Report cards gave us insight into our strengths and weakness, indicated areas of improvement and flagged aspects which needed our urgent attention. Without report cards, we were left with little to no insight into how our efforts were panning out. Data analytics serves the same purpose.
Data-driven analytics give businesses in-depth insight into the nuances of running and managing a successful business. Adding a numerical value to ascertain your business hypotheses, is crucial for growth and scale. A critical part of understanding employee behavior, insight into spending trends, frequent spending categories, and more can be found via data analytics. When seeking to optimize this process, data analytics consulting becomes invaluable, guiding companies in harnessing their data effectively and making informed decisions.
Additionally, these numbers help admins and finance teams get an idea of “how much is too much’, thereby curbing unnecessary spends to optimize business functions. With these insights, businesses can make informed decisions based on what the numbers suggest, rather than ones based on a limp. Thereby, assuring you, your choices have the backing of reliable figures.
Why is disorganized data a roadblocker for your business?
Businesses are growing rapidly. With scale, businesses require to come well-equipped to handle its associated challenges. The situation is no different when it comes to managing expense management.
With the number of internal and external stakeholders who participate in reporting, integrating, collating, approving and reimbursing spends, keeping track of spends can be a difficult task. Further, employees have little insight into the policies, thereby increasing policy violations. Often, neither the employer nor the employee knows what’s a potential red flag. This could prove detrimental to the health of the business.
With the advancement of technology, businesses can now wholly automate their travel and expense management, eliminate manual entry and supervision, streamline the entire process and always stay audit-ready!
Why should businesses use data analytics:
- Declutter fragmented data: Having a bunch of spreadsheets and claimed bills could do little to no good when it comes to deriving value from the data. Often, businesses make decisions based on limited data insight, which result negatively for the company. With analytics, companies can make sense of the data, and access all information under one platform, within a few clicks.
- A gold mine for information: For any business to make well-informed decisions, it is crucial for them to be aware of what the data says. Insights into spending trends, spending categories, frequent high-budgeted spenders and more allow businesses to understand, modify or adapt to better policies. This thereby impacts the streamlining of processes which are crafted to best suit employees and employers, alike.
- Return over investments: For any business to function successfully, it is essential companies always to keep track of the ROIs. With data-driven insight, companies can evaluate the money spend in a particular business deal as compared to the revenue generated via closing the deal. This can allow businesses to modify their expenses, to produce maximum ROI while closing specific deals.
- Greater transparency and visibility into spending trends: Having an expense management system that allows for greater transparency is what every business looks for. The transparency enables employees to understand policies and policy violations better. It also provides analysis of expenses claimed, expense reports and more for employers. Additionally, admins can make better-informed decisions in vendor negotiations and budget allocations with the help of visibility into spending trends via data analytics. Better insight into these variables, allow for an increased level of compliance and policy adherence from both employees and employers.
How does Fyle address this challenge?
With multiple expense reports, expense claims and deadlines, it is humanly impossible to keep track and verify every recorded spend. This leaves considerable scope for encouraging fraudulent behavior.
How can diminished visibility into expense claims encourage fraudulent behavior?
1. Businesses don’t have the bandwidth to validate all expense claims
2. Deadlines for reimbursements result in approving unvalidated spends
3. No real-time insight into policy violations
When a particular expense claim gets flagged, the employee needs to explain the reasons behind it. These explanations go undocumented as they are carried out via phone calls, email or verbal conversations. Thus, most times, they go unaccounted.
With an expense management software like Fyle, you can:
1. Get real-time insight into expenses which violate policies
2. Document the back and forths that happen when employers account for policy violations
3. Maintain a complete digital audit trail to account for expenses which though flagged were approved.
4. Increased compliance and transparency with every conversation or explanation documented for future references
Business can also gain access to analytics of recorded spends. This would allow admins insight into category-wise spending trends, policy violations, and more. With an automated system that thinks for you, it gets increasingly easy for businesses to save time, increase productivity and compliance, and always stay audit-ready.
Why you should make that shift to Data Analytics today:
- Centralization of data: Often, employers or finance teams are required to shuffle through complicated paperwork, spreadsheets, and documents to get a real picture of the current scenario of expense management in a particular organization. Add to this, the variable of handling multiple cities or countries, and this spells disaster.
With the current technological advances, expense management software like Fyle, allow you to access data, expense reports and more, irrespective of geographical locations, accounting systems or currencies, under one dashboard. This gives admins, the superpower of understanding spending trends, employee spending behavior and more across platforms under one centralized dashboard.
- Optimize costs: With increased visibility into the spending trends of the employees, employers, and finance admins can identify frequently contacted vendors. Once done, discounts can be negotiated to optimize spends. Additionally, finance teams and admins can leverage this data to streamline processes further and save money in the process.
- Modify policies: Admins can look into the most frequently violated policies. This can further give insight into why certain policies are commonly violated. Once you identify these variables, admins can look into the possible reasons and make required amendments to the already existing policies, for a seamless and streamlined process.
How can Fyle address your expenses management challenges?
We know it can get difficult to pick the right one, with the multitudes of options present in the market today. To ease out your pain, we have listed the top features of Fyle and how they address your niche expense management challenges.
- A device-agnostic expense management software:
A significant challenge faced by most employees is the fact, that they often merely, just misplace bills. This is an obvious problem that needs to be addressed, considering the number of bills your employees juggle with, at any given point. It is highly recommended that you opt for a device agnostic software. This also means that your employees, approvers and management teams can file, approve and access expense reports, anywhere and anytime.
- Seamless process for filing and managing expenses:
Traditional means of expense management involves manual data entry for employees and manual data verification for expenses. This not only eats up into their productive hours but also consists of a lot of effort and manpower. This feature at Fyle, helps in combating fraudulent behavior via automatic extraction of data, thereby eliminating the possibility of submission of duplicate bills, exaggerated claims, errors in manual data entry and more.
- Enables integration with other preferred software:
Your expense management software comes with a defined set of challenges it can overcome. Yet many challenges may still remain unresolved. With Fyle, you can overcome these challenges by integrating with your preferred ERP, accounting and other software to help address specific problems.
- Real-time policy checks:
Most traditional means of managing expenses require the approver to manually validate each spend to eliminate chances of manual entry errors. Once this is done, the approver should then check for any policy violations. This requires hours of productive time, spent on something that could have just been automated. With Fyle, and everything being automated, it gives enough leg space for your finance team to tend to other pressing work.
Digital audit trails:
Keeping track of every detail when it comes to every employee who has submitted an expense report can be difficult. With automation, its associated features are built to ease your expense management challenges. Fyle enables documentation of every single communication that has been made during the filing and flagging of an expense. Everything gets recorded under one dashboard for admins and employers to review. Thereby, seamlessly providing you with a complete digital audit trail, that keeps you audit-ready, always.
- Easy approval process:
The entire premise for wanting an automated expense management software is to automate and streamline certain aspects of expense management. With this feature in combination with real-time policy checks, approvers can just approve or reject expenses without wasting time on validating individual spends.
- Advanced data analytics:
Data-driven analytics give businesses in-depth insight into the nuances of running and managing a successful business. Adding a numerical value to ascertain your business hypotheses, is crucial for growth and scale. A critical part of understanding employee behavior, insight into spending trends, frequent spending categories and more can be found via data analytics.
Why are policies and data analytics important in expense management?
- A decrease in processing costs: When you have an automated system that does the thinking for you, admins and approvers can directly skip to the part where they approve or reject a spend.
- A decrease in manpower and effort: Expense management was never a part of one’s job description. Hence, it is vital to not invest time, money or effort into it. With one software doing the business, finance teams can utilize their time in more productive ways.
- An increase policy compliance: By simplifying the entire expense management process, businesses can expect a higher compliance rate.
- An increase in visibility and transparency: With everything transparent, it is close to impossible to go about fraudulence.
- Insight into spending trends: Admins and finance teams can use the power of analytics to gain an understanding of variables such as frequent high category spends, vendors, spending trends, and more.
- Real-time insight into policy violations: Admins and employees will be notified immediately, in case of a policy violation. This allows for real-time analysis, documentation and course correction.
- Always stay audit-ready: In case of a policy violation, employees can account for the possible reasons for the violation. The onus of accepting or rejecting the expense claim then falls under the supervision of the employer or admin. Additionally, documented proof of all these aspects, help businesses stay audit ready, at all times.
- Faster, verified reimbursements: With an automated expense management software, doing the thinking for you, you can be assured that the turnaround time (TAT) for reimbursements is cut down by more than half. Additionally, all expense claims are verified and flagged if violating an expense policy or fraud, assuring you all reimbursements are validated before being processed.
With this mind, we hope we have provided you with enough insight into measuring the health of your expense management system.