Many companies struggle to establish a clear and efficient process for claiming expenses. In this article, we will explain how expense management tools can help you in that regard. We will walk you through key challenges and ways to address them with the right software.
Sometimes, your workers will need to cover business-related expenses from their pocket. Mainly when a purchase needs to be made on the spot, with no time to go through the process of having it authorised and signed off. For example, when they run out of the materials required to carry out their duties. Other times, they are less tangible expenses, but still attributed to their ability to work: travelling, accommodation, client entertainment, and many others. Naturally, as a business, you’re meant to reimburse them.
Sounds logical and simple, doesn’t it? Not so fast. If you have ever dealt with employee expenses, you already know most of the potential issues that can arise. From late submissions that wreck your pay cycles to suspiciously costly travelling expenses you can’t dispute - many things can go wrong and cost your company a lot. This is why we encourage you to start using expense management tools. They are created to smoothen most of the friction points.
What is a Good Program to Track Expenses?
A good expense management tool looks different for every business. Here’s how to determine if the solution is right for you:
-
It integrates with your existing stack;
-
It enhances your processes instead of replacing them;
-
It brings new data you’ve previously had no access to;
-
It minimises admin work;
-
It is easily accessible to everyone who will use it;
-
It is simple and straightforward.
The features you need are vastly different based on a number of criteria, and no one but you can define them. Moving forward, we will be talking more about the general uses of expense management tools, ones that are at the core of their functionality.
Challenges Expense Management Tools Solve
There are many reasons why you should give expense management tools a go. Such cover reporting, process automation, better visibility and many others. But let’s go back to the very basics. Although the concept of being reimbursed for one’s work-related expenses is simple, there are still plenty of challenges. Let’s talk about them.
Travelling Expenses and Mileage
One of the most frequently incurred expenses is travelling. While it can be relatively straightforward when submitting receipts for train tickets or parking spaces…It’s not always this simple. First of all, most transport links have switched to contactless payments on the spot even before the pandemic. The latter encouraged more operators to adopt the approach. In this case, there is no invoice or receipt to be submitted.
Driving poses a whole different set of challenges. Although an employee can claim expenses for the petrol, there is no telling how much of that was spent specifically moving between the locations. While this doesn’t mean we encourage suspecting your staff for foul play and miscalculations regularly happen by mistake, it can drain your budget very fast. In other words, while there are certain travelling expenses that can be easily reimbursed and come with a paper trail, others remain very vague and practically untrackable. The good news though is that this challenge is easily tackled by some software solutions.
Expense Submission Process
It might surprise you, but businesses lose billions each year to mismanagement of expenses. Although simple in theory, it isn’t as easy in practice. Many companies don’t even have a process in place, and those that do rarely consider its optimisation. That’s a costly mistake we would like to help you avoid. The first step in that direction is understanding that the very key to a good process is clarity.
Before all, it must be outlined what constitutes a refundable expense and what doesn’t. Then, you need to build a step-by-step process that everyone will have to follow. These will range based on your company’s policies and structure, but here’s an example.
Step one: The employee submits an expense, supplementing it with a receipt proving its genuineness. It’s best to set a deadline clarifying by what time the expense must be submitted for reimbursement.
Step two: The approver reviews the submission and makes the verdict.
Step three: If approved, the receipts are added to accounting software to reimburse the worker and for future auditing.
Step four: The worker is reimbursed either as part of their wages or, if agreed on, as a separate payment.
In the event of the expense being rejected, the worker should be provided with an explanation of why, further clarifying the criteria.
Solutions for Smoother Processes
While expense management tools dig at the core issues the reimbursement processes usually have, their functionality isn’t limited to problem-solving only. They are also capable of enhancing certain procedures that, while are processes of their own, all tie into expense management as a whole.
Bulk Receipt Uploads
Now while the ability to upload a stack of receipts in one go sounds like a feature mostly beneficial for the submitting party, there’s a benefit for you in it too. First of all, you won’t have to approve them one by one either, although we will expand on the approval process in our next section. Secondly, the receipts uploaded will automatically go into a centralised system, meaning you will have them all easily accessible at one location.
Often employees stall the process of expense submission, which can affect your books in the long run. Not to mention, if the expenses are submitted after the cutoff time, there will, naturally, be delays in paying them out, resulting in resentment and distrust from the workers. This situation often arises from the fact uploading the receipts, especially if there’s a hefty stack of them, is a tedious and time-consuming task. Although it’s a process meant to help employees claim their money back, it’s pretty easy to see why they wouldn’t prioritise it over other tasks. Being able to upload everything at once and quicker should make it less of a chore for them. And for you, it means fewer discrepancies. Everybody wins!
Effortless Approvals
Approval of expenses is the conclusive step of the process, therefore it should be approached with the uttermost attention. However, it too can drag on and it’s in human nature to become less focused the longer we are working on a repetitive task. For example, if you are manually approving huge volumes of expenses presented in a spreadsheet, you are more likely to miss errors. This leads to the approval of wrong values, non-reimbursable tasks and receipts that are not related to the expense submitted. In other words - you will be paying for your mistakes. Literally.
Another nuance is that you might be required to log into the system every time a new expense is submitted to review and approve it. While it’s not a big task, you most likely have more burning priorities and might want to postpone it for later. Unfortunately, this is exactly how things get forgotten. We mused long and hard on the solution for this issue at Timesheet Portal, before coming up with an approach that is simple yet, according to our users, very convenient. When you get an email notification of a new expense report, you can review it and make a decision on the spot. That’s right - right from your inbox.
Additional Benefits
If you thought we have now covered all expense software can offer - think again. While we covered some of the core functionality a good solution should possess, very often tools have more in store to offer. These additional features range depending on the vendor and their target market, but one thing is commonly found in all SaaS solutions.
Easier Auditing and Reporting
No process should be set up running and left alone. Be it expenses tracking, attendance monitoring or anything else - all of them are collecting data. And such data builds a great foundation for optimising and bettering the processes moving forward. Expense management tools do more than simply record the metrics. They also come equipped with features designed for you to easily navigate through data findings with an array of filters.
This allows you to get access to a bigger picture, comparing changes that occurred over time and what patterns have emerged. You can then zoom in on specific data fragments, their origins and changes, as well as how they affect your overall results. What’s more, this information is available not just within the platform. On most occasions, it can be exported as a stand-alone report, which is great if the information needs to be passed on to parties that use the software. It is also very handy for both internal and external audits. Not only do you get to investigate quickly, but can produce any related paper trail within minutes.
Summary
Expense management tools are designed with the purpose of reducing the time spent navigating various nuances related to employee expenditure. While simple in theory, expense reimbursements can be a grey area that severely lacks clarity. Unfortunately, this lack of structure can lead to big financial losses.
The designated software helps close these gaps by directly addressing problem areas at all stages of the process. It also brings convenience and minimises work required by any party involved, be it the submitter or the approver. A good solution won’t try to scrap and replace your current operations. Instead, it will help you gather better insights into your current situation to guide you to continue building on the foundation you already have. Overall, if you want your expense claim processes to be as smooth in practice as they are in theory - the right tools are a must, not an option.
Ready to explore their capacity further? Book a demo with us.
