The management of expenses is an inevitable need of companies to enhance their profitability. As a part of the management of expenses, they need to track the cost of every business activity and employees must submit expense reports for the repayment of out-of-pocket expenses. Managers provide approvals of these expense reports for the repayments, track the spendings of the company on T&E (Travel and expense), and record everything for tax purposes. The lack of expense software in companies leads employees to make unwanted purchases, errors in the financial processes and repayments.
Importance of Expense Management System
Automated Expense Reporting Software assists enterprises to build their base by simplifying T&E operations, enhancing the process, and boosting productivity. Eliminating the need to fill out paper forms and hang on sales slips, employees can submit expense reports and related documents, including scans or photos of the bills from their computer, tablet, or smartphone. Reimbursement is expedited, money is credited back to employees' bank accounts, and eliminates the delays in payments.
Expense management software includes:
• Custom rules implement policies, share expenses for approval, automatically approve repeated expense reports and identify innocent mistakes as well as fraudulent activities.
• Compliance with the instructions of the internal revenue service (IRS) and various tax agencies is a key feature of the software. Auditing the company using the software can help to track expenses worthy of business discounts and provide easily accessible documentation.
• Dashboards offer managers integrated cost data and present it visually, making it easy to analyze and understand. The real view of the business operation provides insights into the current status of the company. In addition, this helps finance teams to prepare a budget for the upcoming year by checking the expenses of the company.
• Custom reports provide the details on expenses which include the amount of money, the category on which money spent and details of the person who made the expenditure. In addition, they mention the approval time of cost reports, the status of reports, and their current status in the approval cycle. It enables finance teams to increase efficiency and save costs and identify strategies to tighten and strengthen the company’s base.
Benefits of Expense Management Software
The advantages of an automated process include enhanced productivity, cost control, employee satisfaction, and good compliance. Better reporting facilitates financial planning and analysis as companies evaluate current costs and find ways to increase efficiency and reduce costs.
1. Fast and Simple Process
The old method of collecting expenses included printing copies of the paper, attaching receipts, and sending reports to managers who approved them or brought them back to the employee for adjustment. But now, the process has become simple and fast with automated expense management software.
Once the employee submits the report, the software shares it for approval. Upon approval, the reimbursement amount based on the report is automatically credited to the payroll. If the manager is on leave, the software automatically sends the report to another approver. Implementation of Expense Management Software reduces the cost and time in managing these activities.
2. Faster Repayments to Employees
Using Automated Expense Reimbursement, employees are able to submit the reports easily without delay and decrease the time of approval process from the manager. Therefore, these tools transfer money back to employees' bank accounts more quickly and eliminate the problems caused by errors and delays, thereby increasing employee satisfaction.
3. Less Errors and Delays
In addition to reducing employee payback time, automation features in the software enhance accounting accuracy. For instance, with manual expense reports, employees can create data-entry errors when financial employees transcript information into a spreadsheet. Expense management software reduces errors, duplicate entries, prevents overpayments, and notifies managers if the amount is too high. The software sends alerts when a report or payment expires.
4. Improved Efficiency in Operations
When you bill expenses directly to customers, employee reports must be timely and accurate to maximize cash flow. Expense management software consists of cost tracking, accounting, project management, and enterprise resource planning (ERP) software to provide the necessary support. This simplifies the tracking process of the employees and the approval process of managers and improves the cash flow of the company.
5. Expense Policy Enforcement
Every manager is not up to date with the tax change and latest spending policies. With the addition of custom rules in the business, the automated expense management system eliminates out-of-policy travel expenses from the system. For instance, an employee submits an expense report based on an earlier expense policy, the expense management system automatically rejects this report.
6. Improved Visibility
Expense management software has a dashboard that collects employee expense data and easily represents it in a visual format using charts and graphics. Managers can see measurements such as how much a company spends on an employee or department, or the average time it takes to approve a cost report.
7. Enhanced Fraud Prevention
It is difficult for large companies to manually look at all the receipts and expenses and retrieve money once paid. The lack of accuracy in the payment history also raises questions while auditing and makes more trouble. Implementing effective expense management software automates your process and helps to reduce the errors and fraudulent activities in the company.
8. Simplified Reporting
The options for reporting expenses are by project, by employee, and by category. Analytics and reporting deliver a live insight into the expenses of the company. The automated expense management software integrates the spending of the company into one report. Additionally, the software helps find high-spending employees, utilities providing discounts, and encouraging employees to save money through less spending.
9. Better Compliance
Expense management software supports companies to follow the proper compliance with every tax agency at all levels. Companies are able to group costs and tag them appropriately into categories such as office, travel, and mileage; Golf and athletic clubs are no longer tax deductible for most of their entertainment and country expenses, so they may attract the attention of the IRS. It distributes easily accessible electronic copies of invaluable reports and receipts when audited by the organization.
Choosing an Expense Management System
Follow good practices while buying a cost management solution, and keep a few points in mind:
• Begin a discovery and planning phase that includes defining system requirements, researching and selecting systems based on a detailed expense management workflow. Choose between software-as-a-service (SaaS) or on-premise software.
• Enquire about the expense, customisation, and setup. Consider it with the current cost of customer support, upgrades and software license renewals.
• Ensure that the solution’s customisation help to solve your company's workflow and policies without third-party applications.
• Choose an easy-to-use system with superior functions which helps all employees to submit reports and get approvals.
• Allocate adequate resources to deliver training and technical support to every user.
• Do not transfer all data to the new system; Take the time to delete outdated customer accounts and look for errors.
• In-depth integration with finance and project expense solutions.
Jobin & Jismi is an Oracle NetSuite alliance partner. Contact us directly for a seamless implementation.