In case your team takes long tedious hours to prepare an expense report, if managers take many days to get time to review and approve these, and if Accounts Payable is overloaded and not able to reimburse quickly, you would understand that your expense reporting process isn’t up to the mark.
Expense Management Process – Startup Guide
Today, expense management can simplify and automate expense reporting and reimbursements. The right product can help businesses by:
- Removing all kinds of errors and frauds.
- Increasing cost control and visibility.
- Cutting reimbursement time dramatically.
Here are 5 ways to tell that your system is faulty and needs immediate attention:
- Unnecessary waste of time
Be it for employees or the management, an inefficient expense management system leads to undue wastage of time and causes frustration.
Employees waste time recording expenses since they have to capture them two times, once in their diaries, and once on an Excel or paper form. Managers waste time since they need to search for the expense reports when they are in office, and often cannot remember where they kept the reports submitted by their reporters.
They travel a lot, and that again causes a delay. A/P teams waste a lot of time in reading handwriting of various employees, adding up the totals on an expense report, checking against the expense policy to see if the expenses are within the policy rules, and often, replying to queries from employees about the status.
- Late submission of reports
If your staff is sending expense reports too late, it means you need to check your expense management process seriously. Employees should send the expense reports within a few days of incurring the expense.
The more time they take in submitting, the more difficult it is for them to recollect the expenses accurately, and even more difficult for the manager to verify and approve! A/P departments sometimes find an expense report which has been submitted for an expense submitted in the previous financial year, and the accounting books have been closed by them by then! Is this happening in your company?
- Overshooting the budget
Focusing on growth, team managers end up spending way more than what is justified. Poor expense management processes keep employees and managers uninformed about the exact expenses they have incurred, be it on business trips or activities during business trips. Analyzing expenses after they have overshot the department budget does not help control the spend.
Without a notification system that tells managers and individual employees about their expenditure, business trips can turn into a big waste of money. In some organizations, employees are able to notify accounts teams about necessary changes in the budget, and get them approved when absolutely necessary. Overshooting budgets are a common problem when everyone related to company expenses is not on the same page, or rather, the same interface. It’s time you looked for some smart solutions to manage expenses!
- Manual effort and inefficiency
The entire process of verifying expense policies when checking expense reports, and then performing an accounting of expenses, may currently be manual in your company. Even if you have a spreadsheet-based system integrated with your email server, most of the work your accounts-payable team performs requires person-hours that are completely out of proportion with recommended productivity levels.
Besides time wastage, errors are a big problem with systems that force employees to verify stacks of reimbursement requests. Travel expenses entail so many components, that inefficiency is bound to eat into your productivity unless you had a system of easy notifications and automatic verifications.
Disadvantages of manual processes for expense management:
- No visibility of ‘rogue’ spending.
- Difficulty in consolidating expenses.
- Non-adherence to policy.
- Excessive time wasted in getting approvals.
- Difficult to comply with the policy
This is a major pain point of organisations. HR departments define policies which are in the best interest of employees as well as their organisation. However, if accounts payable is left with the unpleasant task of enforcing them, policies are neither known, nor enforced! Organizations with successful histories will naturally have complex reimbursement policies, owing to company size and resources being use.
However, enforcing those policies requires at least one monitoring person to know all of it by heart. Is that truly possible? What’s better is obviously a system that keeps everyone aware, when and where needed. Let’s face it. Wordy policies are never going to be read or known in full, no matter how sincere or careless an employee.
An automated expense management process can easily close such loopholes. Expenzing, a smart solution, not only highlights policy deviations, but flags them to the approvers, and also provides insights on how often they are happening. Tools like SAP, Concur etc also provide solutions to meet the problems faced by companies.