Employee expenses are in a bind when the time comes to get reimbursed. Sometimes they make a mistake, and that delays the rest of the process. Sometimes an inefficient expense reporting process itself can cause problems. There is cause to believe that both sides of the reimbursement mayhem can be improved. But where do you begin?
One of the critical signs that a business's expense management system truly works is seeing how fast an expense takes to get reimbursed. That gets us back to the process, so can companies benefit from making a change in that aspect? Let's find out.
What is web-based expense management?
Expense management or Travel and Expense Management software are mostly available as SaaS or Software as a Service. Here, the vendor owns these cloud-based SaaS solutions, and the client gains access to it via web-based applications.
Web-based expense management software aims to ease the burden of expense management. The software offers benefits like receipt management, expense analytics, policy enforcement, and more. Employees and finance teams likewise are no longer bound by the constraints of a standard approach.
Vendors have taken it a step further by implementing new technologies and features into these solutions to augment processes. AI and Machine Learning have enabled features like process automation, receipt scanning, and advanced spending visibility. This not only helps streamline the process but also improves employee productivity and morale.
Web-based expense management vs. Manual expense management
A manual or offline approach to expense reporting generally goes like this:
They have to enter all expenses into a spreadsheet like Excel and order it accordingly in the expense report. Reporting in spreadsheets is time-consuming and slow. They then match all the costs with the bank statements or company/personal credit card. They then review the expenses so that they are compliant with the company guidelines. Cross-checking expenses with company rules and guidelines cause additional confusion, as they may be unaware of these policies and may mistakenly enter non-compliant expenses into their expense report.
Employee business expense reports are submitted to them for approval. The manager or approver checks every expense to make sure it falls under company travel and expense policies. This can become really time-consuming for managers as they have to check every expense from each employee to see if they are valid. Managers may just simply refuse to do so and just approve the expense anyway, doing so can cause setbacks when the business is audited. If an expense report is rejected, the entire report goes back to the employee, and they need to start over again. This back and forth between approvers and employees can make reimbursements take an exceedingly long time.
- Finance team:
All the expense reports from the approving managers come to the team after it has been approved. The team processes the payment and the reimbursement amount is sent to the employee. However, when audits are conducted, this can result in discovering non-compliant expenses being reimbursed causing them to chase the employee again to get the money back. An absolute mess from end-to-end.
As we can see, the whole process goes through numerous steps before the employee finally gets reimbursed. In the worst situations, this entire process can take several weeks or even months. Employees spend too much time on creating expense reports, managers are stuck with checking every expense for compliance, accountants face issues with constantly having to check with employees and managers in order to facilitate the correctness of their reports and approvals.
But the process involved in a web-based expense management software goes like this:
They can use a mobile app to quickly capture receipts. On taking the picture, the app automatically extracts all the important receipt details and fills the expense report form. Thus, eliminating manual data entry. Once done, the employee can compile the expenses to create an expense report(s) in a single click. The employee can then submit the expense report to the approver(s.)
The approver receives the expense reports for approval. Approval and rejection happen in real-time, with company rules and guidelines readily available for reference. The policy engine automatically flags out-of-policy expenses and policy violations without any human intervention. Expenses that are not approved are rejected and sent back along with the exact reason. A digital audit trail also documents all conversations around the flagged expense report.
- Finance teams:
The finance team can easily access every expense report that is approved and rejected. The approved expense reports get transferred into the integrated Accounting/ERP software. They then go in for payment processing, and employees get reimbursed on-time.
Thanks to cloud-based expense reporting software, employees no longer need to worry about managing receipts and collating them. For finance and accounting teams expenses and expense reports are accessible based on configurable settings and hierarchy. It also makes it easier to validate every expense thanks to real-time policy checks. This makes expense reporting and expense management a one-click affair.
Does the size of the business matter while choosing a web-based solution?
A recent study by Hubspot, revealed some fantastic insights. Web-based expense reporting software are now increasingly being adopted by smaller organizations for several reasons:
- Speedy deployment: Web-based solutions can integrate with any ERP/Accounting software, and they are pretty much good to go. Modern TEMs remove the hassle of integrations.
- Detailed visibility into spends: TEMs are not just great at improving expense reporting, but also function as excellent expense tracking software. Companies can gain insights into a vast number of expense details, spend trends, and more.
- Highly Intuitive interface: TEMs are designed to be very easy to use by ALL the different users, e.g., Employees, Finance Manager, Accountant, etc. This makes the process of expense management easy for all the stakeholders involved.
- Cost-Effective Solution: Subscription-based pricing makes it attractive to all types of businesses. They also achieve an ROI in anytime between 6 - 12 months. This makes it an affordable option for businesses of all types.
- Redefines the expense management process: Smaller organizations may not have a clue on what needs to be done to improve their current process. Utilizing a TEM software enforces a resolution to that. This helps businesses streamline their expense management.
Key takeaways from the study:
- 28% of small businesses used a web-based solution. Do note that this number was even lower in previous years; the last two years have seen immense growth in startups and small businesses adopting web-based solutions.
- Mid-sized companies and enterprises encourage their employees to travel for work as 39% of the surveyed companies used web-based TEM solutions.
- A considerable amount of time is spent creating, approving, reimbursing, documenting and communicating the state of business expenses.
- 53% of small businesses, 49% of mid-sized companies, and 48% of enterprises were impacted by employees losing paper receipts or submitting reports without receipts.
Top 5 areas to improve from surveyed companies:
- Need to reduce expense report processing costs
“63% of small businesses that switched to a web-based expense management system reduced or eliminated the use of Excel spreadsheets for expense reporting.”
- Poor visibility into expense data leading to bad financial decisions
“86% of small businesses wanted to switch to an automated expense management solution in the next six months.”
- Lack of control over T&E spending
“Automating expense reporting was the second-highest priority among companies when selecting an expense management system, reinforcing the desire to streamline inefficient systems.”
- Frequent instances of non-compliant travel/expenses
"79% of all companies surveyed report having a written travel and entertainment expense policy in place.
- Elimination of hidden costs leading to lengthy bills
“More than one-third of the small businesses surveyed achieved payback on their investments in a web-based automated system in six months or less.”
How is expense reporting improved with an automated solution?
There are various points at which a business can enhance its expense reporting process thanks to web-based TEM software. In particular, automated TEM software can drastically improve many aspects of current expense reporting. Let’s take a look at some of them.
5 critical aspects an automated expense management software helps with:
Automated expense reporting involves employees taking screenshots of their receipts and saving a digital copy of it on the TEM software’s cloud storage. Tracking receipts is transparent and be accessed on the receipt bank by all personnel.
With an automated web-based software card transactions get linked with respective expenses. Multiple corporate card programs can be effectively managed under one platform. Automated reminders help define specific spend conditions for employees. Additionally, automated systems also allow visibility into card spends as well as directly integrating bank accounts.
Configured approvals route to the appropriate personnel for faster checks. Dynamic-single and multi-stage approval workflows with a robust configurable hierarchy system allow for accurate validations. Additionally, digital audit trails allow for unhindered expense tracking. This helps finance teams to stay carefree about staying compliant, as the software does the heavy lifting.
An automated expense management software provides real-time validation applied on expenses based on the configured policy requirements. Approvals happen when expense claims happen. This drastically reduces the reimbursement times. Also, policy violations can be taken action against on the spot. This helps encourage internal policy compliance, while securing your funds for business requirements only.
Existing accounting and ERP software directly integrate into the expense management software. This eliminates the process of accountants having to go back and forth, checking every single expense report. This plays a key role in increasing the financial productivity of your organization.
And that's how a business can benefit from using an automated expense management software. Receipt management and reimbursements don’t have to be a pain for a business. Fyle makes receipt management a breeze. Schedule a demo today, to find out how!