Expenses are a necessary evil in business, but reporting on business expenses shouldn’t make the process harder. Manually filling out lengthy spreadsheets with data and keeping ahold of paper receipts isn’t effective in the modern business world.
Instead, you should consider automating your business expense management and giving your team valuable time back. In this guide, we will discuss what are business expenses, the importance of expense management and why businesses should use automated expense management.
- What are business expenses?
- What can be claimed back as a business expense?
- Why is the importance of automated business expense management?
- Why businesses should use automated expense management:
What are business expenses?
Business expenses are any cost accrued across an organisation. It includes both employee spend and operational spending.
Employee spend is the goods and/or services claimed back by employees whilst operational spend is any cost necessary to keep the day-to-day activities of a business running.
What can be claimed back as a business expense?
Business expenses fall into different categories. Organisations can decide what type of expenses employees can claim back and the total cost reimbursed. Here is a list of typical expenses claimed back by employees with examples:
- Hotel/accommodation: Room booking, parking, breakfast
- Train/plane journeys: Tickets, luggage
- Mileage reimbursement: Commuting to events
- Home office supplies: Computer, keyboard, mouse, phone, desk & chairs
- Food and beverage: Breakfast, lunch, dinner, coffee/tea
- Client entertainment: Planned meals, activity days, internal events
Why is the importance of automated business expense management?
40% of businesses have described their general workplace technology as “outdated” and 38% still use manual expense processes.
This means businesses continue to spend time and money on administrative tasks which are unnecessary in today’s business environment.
Looking for an easy way to automate your business expenses? Try our free demo today and receive bespoke advice relevant to your business needs.
Why businesses should use automated expense management:
- Provides a clear expense policy
- Employees can claim expenses fairly and accurately
- Improves spend visibility
- Allows your business to adapt to growth
1. Provides a clear expense policy
If a business doesn’t have an expense policy, it’s likely that their employees won’t understand what they can and can’t expense.
An expense policy typically covers expense categories like travel, accommodation, food, and entertainment. It helps employees understand their limits and work easily within them, so every business must have an effective expense policy in place. There are many business expense policy templates available for companies to utilise so they can create an effective expense policy.
2. Employees can claim business expenses fairly
A manual process often leads to out-of-pocket employee expenses. Not only is it unfair to the employee, but it leaves finance teams having to rummage through receipts with little control over spending visibility. Here’s how employees can keep track of what they’re expensing:
Manage all claims within one app: Manage the entire expense process on a mobile app. Employees can build, submit, and approve expense claims in any location. Using OCR technology, claimants can snap a picture of their receipt, attach it to a claim, and submit it for approval. Capturing receipt data ensures the expense cost is accurate with minimal chance of reimbursing an invalid claim. Also, an approver can keep track of and approve claims in real-time; an important factor when gaining visibility of expenses submitted.
Business mileage tracking: Without a mileage calculation feature, businesses may end up reimbursing more money than necessary.
For corporate travel expenses, a mileage expense tracker allows employees to calculate car, rail, and air journeys from a point-to-point destination. This ensures accurate mileage is submitted and finance teams can reimburse correctly.
Corporate card: Corporate credit cards allow employees to separate personal and business spending. Separating the two spend categories, allows businesses to keep track and report on regular spending whilst limiting the risk of overpaying.
A feature like Intelligent Receipt Matching, allows users can snap a picture of their receipt and automatically match it with the credit card payment.
Find out what’s best for your business expense management, prepaid cards or a business credit card.
3. Improves spending visibility
Typically, a manual expense process can cause back-and-forth conversations between team members, with multiple emails being sent. This makes it difficult to see who manages different expense categories and which employee they are coming from.
However, an automated process ensures all employee claims are set up with a dedicated approver with a clear understanding of the category type. This usually means businesses can set up an approval process for each employee.
Many expense management providers also offer a multiple-approver feature which allows for even easier expense management no matter the size of the business… For example, a small business may set one approver which goes straight to their finance team. Whereas a larger corporation may need approval from a manager, the head of a department, and the finance team.
As a business continues to grow though, the need for different expense categories will grow. Typical expense categories include hotel/accommodation, train/plane journeys, and mileage reimbursement. Once expenses like this are categorised, this helps finance teams to report on business spend – with the ability to spot trends and inaccuracies.
4. Allows your business to adapt to growth
It’s better to start automating expense processes sooner rather than later.
Implementing expense management software will allow employees to understand what’s required of them and guide businesses to success with stronger control over their business expenses.
It can help speed up employee training, offer a clear structure to how expenses are managed and allow businesses to save money in the long run.
Get started with Webexpenses’ expense management brochure or book a free demo today.
