2019 Guide to Expense Management

Does your Expense Management need Automation?

Here is a pretest for your finance/ accounting teams and employees. This pretest will help you gauge the health of your current expense management:

For your finance / accounting teams:

• How long does it take to validate expense claims for a single employee?

• How often do you come across fraudulent expense claims?

• How often are reimbursements delayed due to missing receipts, and incomplete claims?

• How often are reimbursements delayed due to policy violations?

• Do you have real-time insight into spending trends, category spends and more?

• Would you prefer an automated expense management software to validate and flag fyled expenses automatically?

For your employee:

• How long do you spend collating receipts from business spends?

• How much money have you lost due to delayed submissions, and loss of receipts?

• How long does it take you to submit an expense report?

• Are you aware of your organization’s expense policies?

• How often have your expenses been flagged for policy violations?

• Do you like the process of fyling expenses for your reimbursements?

• Would you prefer an automated expense management software to o fyle your expenses automatically?

Did you know that Travel & Expense Management is the second largest operational cost to a business after employee payroll? Expense management is an unavoidable task for finance teams and employees, alike.

But, what if we told you, we have the secret formula to help solve all your expense management challenges while also streamlining and adding a layer of visibility and accountability to it?

This blog post will help you understand the nuances of expense management and how automation by an intuitive expense management software can help fix your expense management and accounting challenges, forever.

Introduction to expense management

Up until recent times, expense management involved hoards of paper receipts, multiple excel sheets containing expense claims and lengthy and tedious validation processes. This is often the most common problem areas for both employees and finance teams.

The traditional means of expense management often left employees spending hours of their productive time, doing things that clearly weren't a part of their job description.

Are you still using traditional means such as spreadsheets to go about your expense management? This could prove detrimental to the health of your business.

Old is gold, but the same does not hold good at all times. Keeping up with the trends is crucial for growth and scale. If you are currently using an archaic mode to managing your expenses, this article will help take you through the many reasons why you should keep up with the trends and the benefits of doing so.

Disadvantages of using traditional modes of expense management:

Using a traditional means of managing your expenses may seem viable for smaller organizations. With only a handful of employees, validating and managing their spends may not comes across as a huge ordeal.

The problem arises when businesses are in the growth stage. Be it for networking, marketing or sales purposes, your employees are required to travel and help your business scale. Here, your employees may sometimes use their own money for business purposes. Hence, it becomes crucial for you to adopt a new age system that helps you achieve a seamless expense management experience, for your employees and finance teams.

To help you understand how using traditional means could prove detrimental to your business, we have compiled a list of plausible disadvantages to using conventional methods of managing your expenses:

Time-consuming:

Traditional means require manual data entry and manual verification. This costs your finance team and employees crucial productive hours.

Higher chances of human error:

Human error and human bias could occur either while inputting or validating claims. This results in businesses losing lots of money.

Increase chances of fraudulent claims:

This could be done through incorrect or exaggerated claims, duplicate bills and more.

No visibility into spending trends:

Not having sufficient insight into what the data is trying to convey to you, may result in employers or admins making ill-informed decisions.

A decrease in productivity and efficiency:

Businesses run the risk of employees and finance teams spending too much time in reporting, claiming and validating expenses.

Hidden costs of manual expense management:

Here are some hidden costs you can avoid by automating your expense management software:

• Loss in productivity and efficiency:

  Often traditional means of managing expenses make the entire process cumbersome for both employees and finance teams. Employees are required to collect and compile their expenses manually. Once organized into long sheets, these sheets are submitted to managers or admins for approval. Add to this, variables such as multi-state or multi-country expenses, different currencies, and expense policies ~ and you know this spells trouble.

  Once submitted the onus of approval lies on the managers and admins. The process requires them to check and validate expense claims manually. Deadlines, late submissions, policy violations and back and forths with employees take most of their valuable time, doing things that could have been merely automated in the first place.

  This process takes hours of productive time, thereby directly affecting the growth and scale of the company, in the long run.

• Loss of money over claimed expenses:

  Deadlines, get to the best of us. Most employees just want to be done with the entire process, even if it means losing their valuable money. But, this only makes up for less than half of your employees.

  Due to deadlines, one of the most common things noticed is that the employees are more prone to making errors while manually entering spend claims. Another common phenomenon seen is that some employees use it as an ideal opportunity to make a few quick bucks.

  This only increases the amount of work for your finance and accounting teams. They now also need to creative measures to overcome such behavior. Fraudulent behavior and manual errors in expense claims may seem like a small problem to tackle now, but can be one of the critical roadblocks to growth.

• Encourage fraudulent behavior:

  As per a report by ACFE, occupational fraud cases can be broken down into three categories in governmental organizations:

  • 88%

    Asset misappropriation;

    accounting for a median loss of around

    $100,000

  • 47%

    Corruption schemes;

    accounting for a median loss of around

    $400,000

  • 6%

    Asset misappropriation;

    accounting for a median loss of around

    $315,000

  These statistics give us an indication of the potential losses incurred by public sector organizations, which have far lesser stringent rules while managing expense claims.

• Some of the most common ways employees indulge in fraudulent

  • Submission of duplicate bills

  • Intentional manual errors while filing an expense claim

  • Submission of overinflated/ exaggerated expense claims

  • Submission of forged and non-existent bills

This shows the dire need for well-defined expense policies, to help curb unnecessary spends at the source. When using traditional methods, finance and accounting teams are required to manually validate these spends, leaving room for approving multiple fraudulent claims.

Traditional vs. automated means to expense management:

4 uses to automating your expense management software:

1. Save oodles of money:

   As per a study conducted by PayStream Advisors, companies approximately spend $20.18 to process an expense report. Multiply this with the number of traveling employees you have and the number of reports filed every month. You know this means big money. Big money which is utilized on unnecessary spends which could have been curbed at the source.

2. Increase compliance and accountability:

   Businesses using traditional means of handling expense management almost always have little to no insight into the expenses claimed. Automation as the name suggests, automates all these processes for you, with virtually no human intervention.

3. Save productive hours:

   Manual work, be it data entry or verification of claimed spends, can be a daunting task. This requires tons of patience, manpower, effort and hours of huddling around. Looking through multiple expense submissions, comparing and validating expense claims, and having various back and forths when there are policy violations are just some of the things admins and finance teams deal with on a regular basis.

   But what if we told you, automation can solve this entire challenge?

   With an automated expense management software, admins and finance teams would spend less than half the time they spend while using traditional methods. Employees can directly upload images of receipts, where the expense management software can automatically extract specifics from it. Additionally, once all the receipts have been submitted, employees can directly generate an expense report within minutes. What generally would have taken hours to compile and submit can now be dealt with, within a few clicks.

4. Increase employee satisfaction and morale:

   It is vital to keep employee satisfaction as one of the critical attributes to gauging the health of a business. Happy employees would mean improved productivity and efficiency. While on business trips, employees are required to use their personal money for the company. Hence, reimbursing them on time via seamless processes is crucial. Automation of your expense management process aims at reducing work for your employees, thereby showing, you value their time and effort in the betterment of your business.

Benefits of using an automated expense management software:

An increase in policy compliance, visibility and transparency:

By simplifying the entire expense management process, businesses can expect a higher compliance rate. With everything transparent it is close to impossible to go about fraudulence.

A decrease in processing costs, manpower and effort:

When you have an automated system that does the thinking for you, admins and approvers would only need to access and approve reports via one centralized dashboard.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.

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

An increase in visibility and transparency:

With everything transparent, it is close to impossible to go about fraudulence.

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, assuring you all reimbursements are validated before being processed.

Word of advice, when it comes to picking the right expense management software for your business:

• Jot down all the challenges you are facing with your current expense management system.

• Allocate a budget depending on the number of employees you have, the stage of your business and more.

• Make use of the “Free Trials” and always request demos to gain a better understanding of the expense management software you wish to proceed with.

• Look for an expense management system which best suits your requirements.

• Step in into the new-age system of seamlessly managing your expense management woes.

• Get on the bandwagon for change, and step into the digital era of effortlessly managing your expenses.

Ideal Features in an Automated Expense Management Software

It’s safe to say, expense management is one of the most dreaded functions of running a business!

A common sight one can witness during the reimbursement cycle is, employees drowning in paper bills, and spreadsheets, while approvers and finance teams run around like headless chicken to close the reimbursement process with stringent deadlines.

Traditional means of managing expenses come at a cost. A quantitative and qualitative cost that can dampen the pace of your business!

This article will help you understand the need for the transition from the conventional to the automated means of expense management. It will also help provide insight into the ideal must-have features in your automated expense management software.

Can your spreadsheet do this?

Conventional means of managing expense management is usually done via spreadsheets. Though painstakingly it does help you record and manage expenses, can your spreadsheets also do the tasks mentioned above?

If no, you must highly consider shifting to an automated expense management software that can seamlessly manage these functions for you.

Here are some reasons why businesses like you consider automation?

• Cut down on unnecessary spends

• Increase compliance and accountability

• Real-time visibility and transparency

• Save productive hours

• Increase employee satisfaction and morale

Can an automated expense management software reduce manual work?

Managing your expense management, shuffling through hoards of physical documentation and receipts, hovering over multiple dashboards, dealing with policy violations and more are some of the ways businesses waste their productive time.

Manual work, be it data entry or verification of claimed spends, can be a daunting task. This requires tons of patience, manpower, effort and hours of huddling around. Looking through multiple expense submissions, comparing and validating expense claims, and having various back and forths when there are policy violations are just some of the things admins and finance teams deal with regularly

But what if we told you, automation can solve this entire challenge?

With an automated expense management software, admins and finance teams would spend less than half the time they spend while using traditional methods. Employees can directly upload images of receipts, where the expense management software can automatically extract specifics from it.

Additionally, once all the receipts have been submitted, employees can directly generate an expense report within minutes. What generally would have taken hours to compile and submit can now be dealt with, within a few clicks.

If any inconsistency or policy violation is recorded, both the employers and the employees will be notified about the same. Once this is done, employees can provide detailed explanations for the violations, and the admins now have the right to either approve or reject the particular spend.

What’s more?

Employers don’t need to shuffle through hoards of emails for these explanations. They are all documented and can be accessed whenever need be. This further cuts another time-consuming step while managing expenses.

Ideal features to look out for in an automated expense management software:

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 that qualify as must-haves in your expense management software

List of features your expense management software should have and the problem they address:

• A device-agnostic expense management software:

  This feature allows employees to file expenses on-the-go, from a device of their choice. Similarly, it also will enable approvers to access and accept or reject filed expenses from their preferred device and location. This drastically reduces the turnaround time for reimbursements and eliminates chances of fraud to a drastic extent.

• Seamless process for filing and managing expenses:

  This is an essential must-have feature for any automated expense management software. This feature enables employees to click and upload images of receipts directly. Once done, most software also provide an automatic data extraction element, that further simplifies the process. Similarly, admins or approvers can view expense reports from a single dashboard to manage expenses.

• Enables integration with other preferred software:

  Having an integration-friendly software further helps simplify and streamline your expense management process. It is essential that you look into the possible integrations that a particular expense management software provides, to understand the pain-points they can address.

• Real-time policy checks:

  This feature is crucial for any expense management software. This enables real-time policy checks on reported expense claims. If any claim violates a policy, the expense gets flagged immediately, and the approver and the employee get notified about the same. This feature saves time and adds a layer of transparency and credibility to your expense management.

• Digital audit trails:

  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

• Advanced data analytics:

  This feature helps provide insight into what the numbers have to say. It allows admins and finance teams to 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 merely on a limp. This feature assures you, your choices always have the backing of reliable figures.

Benefits of using an automated expense management software:

We have compiled a list of benefits your management team (finance and accounting teams) and employees may benefit by using an automated expense management software.

The Role Policies and Analytics Play in Expense Management

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

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?

Insignt 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 software, 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

An increase in policy compliance

A decrease in policy violations

Insight into spend trends, categories and more

Information on most frequent spenders and vendors

A reduction of fraudulent behavior

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.

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?

• Businesses don’t have the bandwidth to validate all expense claims

• Deadlines for reimbursements result in approving unvalidated spends

• 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:

• Get real-time insight into expenses which violate policies

• Document the back and forths that happen when employers account for policy violations

• Maintain a complete digital audit trail to account for expenses which though flagged were approved

• Increased compliance and transparency with every conversation or explanation documented for future references

What's more?

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.

How does Fyle address this challenge?

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.

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 does Fyle address this challenge?

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.