Manual expense management processes can leave finance teams in the dark about how much money a business is spending. Expense management software captures, tracks, and centralizes expense data in real-time to report exactly where your company’s money is going. You can analyze this data to gain insights into expense policy compliance and spending patterns, detect errors and fraud, and forecast future spending.

Understanding expense management

Another factor to consider when choosing an automated solution is its integration. The software you choose must integrate with the existing system for a smooth transition. Automated software contains documented expense proofs for any sales and purchases made in case of an audit. However, better solutions are always easy to use and don’t require much effort. Once the receipts are recorded in the card platform, the employee doesn’t have to keep them with himself.

Effective expense policy enforcement

With features like automated data extraction, real-time policy checks, and more, it leaves no scope for human error. Be it manual data entry of spends, or manual verification of claimed expenses, all of this can be done with a few clicks, with zero human intervention. 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.

Understanding expense management

They can also restrict what the cards can be used to buy in accordance with their company policies. There are several methods that businesses might use for expense tracking. Businesses might use employee reimbursement methods in which the employees are required to spend their own money and then to submit reports of their expenses. The employees then have to wait for the reimbursement requests to be approved before they will be repaid. While searching for the right automated expense management software for your business, you’ll realize that not all systems are the same. The features offered by expense management software must be aligned with the unique needs of your business.

Get your workflows automated for FREE

While on business trips, employees are required to use their personal money for the company. Automation of your expense management process aims at reducing work for your employees, thereby showing that you value their time and effort in the betterment of your business. Managing the employee expenses manually for the entire company can get tiring and cumbersome as it takes days or weeks to process. Here, the employees should collect all their receipts by month-end/quarter, send them for approval, and then send the approved receipt to the finance team for validation. This app allows you to easily store digital copies of receipts and record expenses in real-time. Connect credit cards to Zoho Expense to automatically import and manage transactions and use analytics to curb excessive spending and keep policy violations in check.



Posted: Wed, 09 Nov 2022 21:40:09 GMT [source]

Once you’ve collected all the data, validate it for errors such as duplicate entries. When the expense reports are entered manually, there are chances of many errors. According to the Global Business Travel Association, there is a 19% chance of expense reports with errors. This real-time and improved visibility of expenses allows organizations to oversee their business expenses and purchases in real-time, and also creates accountability. Once the expenses and claims are approved by the manager and accounts, the payment is made to the employee.

In the US, food and beverages are 50% deductible, whether the expense is incurred during an event, a business trip, or a client dinner in your home city. Not only can this save you and your team time and effort, but it can also help improve the accuracy and consistency of your records, leaving you better placed to cope with the possibility of audit. Last-minute approvals might result in out-of-policy claims being approved.

Expense Management Training Classes

An automated expense management process minimizes risks that are usually characteristic of traditional expense management. Here are a few advantages of using an expense management software organized by stakeholders. Once you have understood your significant pain points, you can choose an automated expense management platform to streamline your business expense reports and processes. From expense requests to the final approval stage, automated expense management software has several different features to manage your expense reports. An automated travel and expense management software makes it easy for employees to submit compliant expense reports. It also eliminates the need for constant back and forths between stakeholders to ensure timely expense report submissions, approvals, and employee expense reimbursements.

Understanding expense management

Tracking and controlling business expenses is necessary to keep business costs under control. Businesses need to have expense management systems in place to control costs. An automated expense reporting and management system streamlines business cost management for the business. To get buy-in from senior management, ensure that the business plan for automation provides concrete evidence on how it will help them pursue these three goals.

guide to travel and expense management

This is because creating and submitting expense reports manually for every expense incurred can be tedious and time-consuming. Uploaded receipts and expenses can be categorized, coded, grouped, and entered into the books without any extra work or steps. Expensify manages your receipts and expenses and can even automatically submit a client’s business expenses for approval and reimbursement. An expense management app with advanced data analytics can elevate your business.

Automated expense management workflow is streamlined, and redundant steps are eliminated. Employees need not waste their time on repetitive and cumbersome activities, instead can focus on project-related activities, which will improve overall business productivity. The accountability of employees also improves by automating the expense management process.

What is an expense policy?

In addition, you know that your supervisor or the finance department asks you to justify the expense report. The loss of expense receipts can also lead to inaccurate expense reports, possible mistrust of the employee and potentially negative effects on the company’s efficiency and morale. It is vital to keep employee satisfaction as one of the critical attributes to gauging the health of a business.

  • Creating and sustaining expense discipline requires a level of discipline, accountability and commitment that, unless fully supported by senior management, will be hard to implement.
  • There are a few factors to consider when looking for automated expense management software.
  • You will have a solid business case for automating expense management processes in your company by now.
  • The JD Edwards EnterpriseOne Expense Management system is designed to help companies effectively manage reimbursement requests.

They can also be used by employees for reimbursement of business-related expenses. The expense management system must seamlessly integrate existing systems like ERP, or accounting systems. The cost of goods includes the cost of manufacturing or acquisition of goods that are sold to customers during the accounting period. The cost of goods sold must be deducted from the sales revenue to calculate the gross profit. Includes cost the raw materials, direct labor, and indirect expenses like electricity consumed in the manufacturing process and depreciation of costs of production equipment.

This process takes hours of productive time, thereby directly affecting the growth and scale of the company, in the long run. For example, if a receipt image doesn’t get or the employee cannot submit it for approval due to technical issues. Then, having technical support that can quickly resolve the issue will avoid such problems. In case of a violation, employees can come up with multiple reasons for violating the process.

Traditional vs. automated means to expense management:

Many are cumulative and show total spending for a company or department over a certain period of time . Organizations are continuously looking for ways to improve their products, services, processes, and understanding of customer requirements. Business expenses towards research and development activities in the accounting period are classified as R&D expenses. While the exact nature of an expense management capability can and does differ from one organization to another, the one constant has to be management’s demonstrated commitment to its importance.

Analyze your current expense policies and data to identify areas where you’d like to make improvements or streamline workflows. Adding payment cards or virtual cards to your expense management system can make this process even faster and more secure. Pcards can be assigned to individual employees, and expenses can be tracked and approved in real-time. These were some of the many factors you should consider when looking for automated expense management software.

Custom automated approval workflows

These features help you understand a business’s or client’s spending habits and obtain accurate financial records, saving you time and money to focus on your business or advising your client. You can use this cost savings estimate and the pricing for different expense management platforms to calculate a rough estimate of the ROI for automation. You can refine your estimate by estimating or modeling the indirect costs savings from automation. These include reduced fraud and errors, streamlined processes, better cash flow, and more money to invest in opportunities. You can also consider future factors such as business growth and expected increases in the number of expense reports.

Tracking and control solutions

An automated system will significantly reduce the amount of time spent on each expense report, saving time and money. Automation also reduces errors in expense reports, which reduces costs even further and How To Choose The Best Expense Management Software decreases the risk of missed errors. Not only does expense management platforms shorten the preaccounting process, as they can be integrated with accounting systems to import any expense information.

Two or three vendors should emerge as a potentially good fit for your business at this stage. Invite each of these vendors to provide a proposal to automate your expense management processes. Forward the proposals and your recommendations to the stakeholders within your company and ask for their opinion. Once you’ve got a clear understanding of your current processes and goals for expense management and buy-in from stakeholders and senior management, you can look at expense management solutions. The right solution needs to be cost-effective, scalable, and powerful enough to meet your expense management needs. The solution also needs to be flexible and adaptable when your needs change.

For example, recruiting and sales might have a higher average spend than the general company policy. You can also create policies for certain people or small groups, like c-suite executives. Take it as a clear sign that it’s time to change the way that you manage your expenses. Also, keep a close eye on the time it takes to process employee reimbursements. You wouldn’t ask your friends or family for an interest-free six-week loan, so you probably shouldn’t ask your staff either. Reviews from customers who use a software provide insight into their experiences post-implementation.