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Expense Management Solutions - Best Practices

Jul 10, 2017 5:07:23 PM

If you are using an expense management automation solution or are familiar with one, then you must be well aware of the benefits it brings with it. The reliable, automated system allows employees and managers to free up their schedules that would have otherwise been filled with manual work like creating expense reports and shuffling for the expenses incurred that month. In fact, 42% companies have agreed that automation helps in reducing the time spent in creating  and approving expenses. An astounding 92% of the companies are achieving full return on investment in two years or less and this only goes to show that the system is worth the resources put into it. Although companies are gradually welcoming automation in expense management, the true potential can be unlocked only when you prepare your business for automation. A few simple, yet effective best practices have been formulated and presented below.

 

Collect Relevant and Required Information 

Fyle extracts expense data automatically

Some companies do not acquire sufficient information from employees while tracking expenses which increases manual work for accountants and managers who have to then chase employees. On the other hand, asking employees for too much information will only make expense reports confusing and frustrating for them. Having relevant and required information like time of expense, place of expense and vendor details can help companies gain insights and avoid fraudulent practices. Technology is now capable of automatically extracting expense related information from scanned/photographed receipts, emails and most of the other forms of receipts.

While the meta information is useful, it’s also necessary to keep a track of the changes made by user, approver or the automation engine in a receipt after it is claimed. Solutions often allow managers to follow up on suspicious expenses and allows employees to provide explanations when needed. Having a trail of all activities right from claim to reimbursement can be used as indicative/predictive pointers for behavioral insights into your workforce - and can be used as input to your HRMS modules as well! 

Have a Simple and Clear Expense Policy 

Fyle's Expense Policy Violation - Expense Management Solution

Follow the principle of quality over quantity. Think of your expense policy as an informative paper document rather than a 30 page book. It is highly probable no employee will make the effort to go through your 30 page expense policy. Even if they do it is almost impossible for them to remember every single policy. All your policy needs is some brief, yet enforceable points keeping the most important sections in mind. This could primarily include:

  1. Reimbursable and non-reimbursable expense categories
  2. Upper and lower limits on expense claims
  3. Team-specific, project-specific or role-specific criteria for reimbursement
  4. Time boundations on expense claims
  5. Predefined mileage rates for all vehicle types (cars, medium sized vehicles, cabs)

Ensure employees are aware of this shorter and much simpler expense policy and strictly abide by it. The rest can be taken care of  by enabling synchronous policy checks on your expense management software. Companies can feed in their policies and employees will be notified about policy-violating expenses in real time. The edit history can also help managers and finance teams view the audit trail and be on the lookout for any fraud.

 

Reimbursement On Time

Email Plug-in - Chrome Extension - Track Receipts From Your Inbox

Automated expense management systems come with powerful features like claiming expense from your emails and using the smartphone app to scan paper receipts which allow quick and easy expense reporting. However, some employees still forget to record purchases as and when they have made them. Organisations should give their employees a specific time limit to report expenses. Having a deadline will avoid consecutive procedures from getting delayed and hitting the employee’s wallet. The expense software not only sends scheduled reminders and emails to employees for filing expenses but also makes it possible for managers to approve these expenditures punctually through notifications. This way both employees and managers are more prompt with their duties and it inculcates a good practice boosting their morale and productivity. The system helps eliminate any complications in the operational procedures and enables the company to maintain a fair setup.

  

Analyse Trends and Take Action 

Expense Analytics With Fyle

It is important for businesses to use the analytics feature that comes with most expense management software. The categorised spending chart will help finance folks understand which section has most amount of costs and whether it is wasteful expenditure. If in case it is, the company can take a call on budget cuts. Make sure your company reviews the expense policies from time to time with feedback from expense analytics, incorporates any changes that have been made and publicizes it to employees. The company can further drill down the analytics to individual level insights and let employees know where they need to curb their expenditure. This encourages transparency by giving your team accurate data and numbers. It will further help you pinpoint preferred vendor relations by going through expenses specific to them. It keeps fraud in check and gives the organisation a competitive advantage.

Research shows 71% employees are likely to switch employers if they are not reimbursed on time.

With the adoptions and consistent utilisation of the above best practices, companies have already reported 91% increase in compliance rates. Organisations can further save a lot of time and money along with accelerating employee satisfaction. With effective handling of expenditure, timely revision and strict enforcement of policies, companies can keep can always bottom line in check.

Fyle promotes the use of these best practices and keeping them in mind works on the best features that it could include in the software in order to make inculcating these principles easier.

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