Managing expenses is a crucial element of running a successful organisation and keeping on top of budget.
With travel and expenses being the second highest controllable cost of a company (behind payroll), it goes without saying that adopting an efficient system of expense management should be one of its top priorities.
Traditionally, processing employees' reports for work-related trips and expenses has been a laborious and time-consuming task completed on-premise by HR, and although some workplaces still operate in this way, there are an increasing number of organisations turning to expense management software in an effort to control this aspect of their finances.
In this blog, we will explore the benefits of using an expense tracker and how it can be utilised to help your business gain a competitive edge.
What is Expense Management Software?
Expense management done manually is often an arduous operation full of paperwork and spreadsheets during which employees are required to submit paper receipts and invoices. Following managerial review and approval of the expenses, the reports are handed over to the finance teams who are responsible for reimbursing the employees. But expense management software changes all this - it automates expense reporting and expense processing on an all-in-one software-as-a-service platform.
Using a single, cloud-based software, employees are able to upload invoices and receipts, managers can approve submitted transactions and reports, and organisations can track, analyse and evaluate trends relating to monthly expenses on a day-to-day basis. Not only this, but the accessibility provided by using an online platform means that expenses can be managed in-app in real-time and on-the-go; a near-necessity in a time when geographically dispersed workforces are increasingly common and remote work set-ups have become the norm due to COVID-19.
The platform's dashboard can be tailored to different workflows, allowing employees and management alike to practice expense management in a self-service way, even while the software itself integrates multiple departments and stages of the process. By streamlining the system like this, the software eases the burden on HR, and consequently, businesses can improve their profitability.
The Key Benefits of Expense Management Software
1. Faster and simpler process
From the submission of a report through to the approval and reimbursement, automated expense management systems make for a much more efficient, all-round process than those that are paper-based.
The mobile nature of the software reduces the time that is spent transferring transactions across people and departments drastically. The increased accessibility of expense management reduces the time taken to generate expense reports and results in a more organised and integrated system end-to-end.
2. Faster reimbursement
Manual expense management slows down each individual stage of the process, the most important one arguably being the final step: the reimbursement of employees. Without expense management software, such payments can be delayed by the cumbersome tasks which precede them, but with it, companies can ensure that their people are reimbursed quickly and accurately.
By swiftly getting approved expenses through to payroll and repaid, organisations will achieve higher levels of employee satisfaction as well as reducing the workload placed on HR.
3. Fewer errors
The Global Business Travel Association has found that 19% of all expense reports contain errors. While human error is a natural aspect of life (see a previous article on the cost of inaccuracy in manual data handling), it can prove very costly to organisations if employees' payments are routinely being reimbursed incorrectly and audits are complicated by erroneous data.
Using expense management software, all tracking and calculation is automated (including the management of multi-currency expenses), meaning that error-prone systems are eliminated and employees' receipts and invoices are paid accurately.
4. Increased productivity through automation
Cutting the time spent by HR on tedious paperwork by introducing this software into your workplace has multiple benefits, one being that it is more cost-effective, due to countless hours of saved time. As well as this, though, the automation of expense management allows HR professionals to place stronger focus on higher-value tasks than outdated administrative tracking procedures, which will lead to boosted productivity within the department.
Productivity can also be increased company-wide due to the expense tracking which is featured on the software, because its enterprise-grade analytical functions facilitate management to track workforce trends. The better insight which this provides into the handling of expenses within an organisation allows for more informed decision-making when it comes to budget and better project management; in short, greater productivity across the board.
5. More effective policy enforcement
Each company will, of course, have its own expense management policies, especially in terms of what is and is not covered. Expense tracking software allows organisations to customise the platform around their in-house payment policies, ensuring that any non-policy expenses are automatically flagged to not waste the time of HR.
Over time, this will improve the workforce's understanding of the organisation's expense policies and make their own handling of their budget and expense claims much more efficient. Additionally, the software will send automatic alerts to remind employees to complete expense reports on time - removing the need for HR to chase invoices and, ultimately, leading to more timely reimbursement.
6. Ensured tax compliance
One of the main reasons expense reporting is done is to document expenses for tax purposes and claim deductions. But tracking and reviewing reports and making sure each one complies with the regulations of the tax agency can be a complicated and tedious exercise, and one often rife with mistakes - mistakes which can sometimes lead to hefty tax penalties that put unnecessary strain on a company's finances.
With an automated expense management platform, the software will identify any errors, whether they be innocent mistakes or fraudulent entries, ensuring HMRC compliance by your company and keeping it safe from potentially costly fines if audited.
As well as this, the tracking function of the software allows managers to spot problematic patterns in expense reports—an employee who has regularly submitted duplicate invoices, for example—allowing organisations to pin-point and deal with problematic behaviour.
7. Improved visibility
Another benefit of expense management software is its user-friendly interface, which provides better visibility for those running a business as well as for employees. While the ability to create bespoke dashboards for different employee types will improve employees' understanding of receipt management, the cloud-based nature of and seamless data sharing within the software gives line managers, directors and CEOs an improved overview of budget.
With the facility to view breakdowns and trends by expense category or by employee, the expenses software enables those at the top to better control budget and optimise the organisation's overall expense management.
As you can see, the benefits of incorporating expense management software into your workplace are manifold. XCD's best-in-class time and expense management software can help you to reach your financial goals; you can empower your staff while time tracking and cutting processing costs, so what are you waiting for?