T&E takes a considerable share of your company’s spend and you should pay attention to it. T&E is an inevitable part of any growing business. The percentage-use varies based on the company size. Nevertheless, companies have to still allocate budget for T&E.
That said, what exactly is T&E?
In this article, we will discuss everything you need to know about T&E reports. Additionally, we also discuss the benefits of automating T&E management in your organization.
What is T&E and what does it stand for?
T&E stands for Travel and Expenses and is the cost incurred by your employee when on a business trip or any expenses made for business purposes. Based on a survey by Forrester, it is the second most difficult operating expense, after payroll. Most of the travel expenses include air travel, meals, mileage, and accommodation.
What is a T&E expense report?
A travel and expense report contains a list of all the expenses incurred during a particular business trip. It is like a file that contains all the paper receipts along with the expense reporting form. Employees are required to submit these expenses to the finance team or the reporting manager within a stipulated time frame to avail timely reimbursements. Usually, companies have a T&E policy in place that outlines the dos and don’ts of business expenses. It entails the spending limits for each type of expense and what happens when they violate the set restrictions.
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Why is it important to report T&E expenses?
As a common practice, companies set aside a part of their budget T&E. It is either paid as a cash advance before the trip or it gets reimbursed post-trip. Therefore, it becomes crucial that companies account for allocated budgets. That is where T&E expense reports come in. Also, T&E expenses are tax-deductible. Entertainment expenses, in particular, catch the attention of the IRS because you need to prove that the expense claim is strictly business-related. As a result, it becomes vital that companies keep a record of all receipts for reported expenses.
On the other hand, T&E expenses are vulnerable to fraud. According to the Association of Certified Fraud Examiners’ 2018 Report to the Nations, close to 21 percent of fraud in small businesses is due to expense reimbursements. In large businesses, it accounts for 11 percent. This could be in the form of fake reimbursements, duplicate receipts, or altered expense reports. Everyone in the company, ranging from the new recruit in the sales team to the top management, can contribute to expense fraud - all the more reason to keep a hawk’s eye on your travel and expense management process.
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How can you report T&E expenses?
- Using an expense report template for tracking expenses:
Many companies start their business expense tracking process on excel sheets. However, it can become cumbersome in the long run. The expense reporting process is still done on paper, which means employees have to save their paper receipts for a long time. Further, all communications happen over emails and phone calls, which adds to the delay. It is also difficult to track the audit trail when expense reporting is done on paper.
- Using a travel & expense management software:
Travel expense management software helps in streamlining the process of expense reporting. It lets your employees submit expense reports on-the-go, using the mobile app. Thanks to OCR technology, employees can now capture expenses directly from receipts, thereby eliminating the need to save paper receipts. Approvers are also notified of the submitted expenses reports and can approve/reject expenses in a single click.
An expense reporting software that supports policy compliance is a huge plus for businesses planning to scale. It can help flag policy-violated expenses in real-time, thereby making it easier for approvers to spot violated expenses. Moreover, the digital audit trail keeps track of all the changes made to a particular expense report. This helps in establishing transparency in the expense reporting process.
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How does automation help in T&E expense reporting?
Creating a travel and expense (T&E) policy and implementing corporate credit card programs is a great start towards managing your employee expenses. However, when done manually, it becomes tiresome for the finance team to go through a multitude of expense reports. This is where automating comes in.
The finance team no longer has to go through paperwork. Policy violated expenses are often flagged, therefore making them stand out from the rest of the expenses. What’s more, with advanced data analytics, they can analyze the spending pattern of the company in a few clicks. This will help them make changes in the expense policy and take better financial decisions.
With an expense management software like Fyle, eliminate all challenges related to your expense management. Turn to paperless expense reporting and decrease your reimbursement turnaround time. To know more, schedule a demo with us today!