Back to basics: How to better manage employee expenses
Whether you’re a small start-up or a large multinational business, the basic challenges of managing employee expenses remain the same. You need a simple and efficient way to reimburse workers for any business costs – from plane tickets to a coffee.
In theory, it should be simple. In reality, it has not always been simple.
Employee expenses continue to be an area of financial administration which many businesses struggle to properly manage. This leads to expense management which is slow, inefficient and continues to cost companies valuable resources.
It’s estimated that around $2.8 billion is lost each year by US employers to expense fraud. A 2018 global survey identified expenses as one of the chores that are taking up more than a quarter (26%) of employees’ time.
But why?
At the root of these inefficiencies is the traditional method that most companies still use to handle out-of-pocket costs. This typically involves claims being submitted with paper receipts and manually processed via spreadsheets.
This manual approach can make managing expenses needlessly complex and unwieldy. Finance teams can be overwhelmed with paperwork, missing receipts, out-of-policy claims, and a manual approval process. These can contribute to a lack of control of expense costs.
So how do you fix this?
These are problems that digital technology is helping to strip away. A paperless process, combined with task automation, is simplifying and streamlining the entire way that employee expenses are managed.
By removing admin clutter and confusion, companies are able to go back to basics – creating a simple and efficient way to reimburse workers. Here’s how:
1. Plan: Expenses policy
The foundation for any effective expense management is an active and enforced expenses policy. A document that clearly and concisely sets out the basic instructions on:
- How to make a reimbursement claim
- What can be reimbursed
- Spend limits on reimbursable spend
Follow the link for our full guide to creating an effective expense policy.
One problem with a traditional approach is properly communicating your policies with employees. A policy document tends to be glanced at once and then fades from memory.
When policies are changing over time – with revised limits and rates – it becomes a constant battle to ensure these rules are effectively communicated and followed. A cloud-based system, like Webexpenses, solves this problem by allowing a policy to be integrated into the process.
2. Manage: Maintaining financial control
Once the expense policy is created, it is imperative to actively enforce your policies. This is the crux of the problem caused by inefficient paper-based methods of expense management.
A digital expense system, like Webexpenses, converts paper receipts into a digital form, allowing for a completely digital process with accurate data. The information is instantly accessible and automatically checked to ensure policy compliance.
Utilizing the policy created in the preceding step is integrated into the system. On-screen notifications and checks automatically provide claimants with policy reminders and alerts whenever limits are breached, automatically enforcing your expense policy in real-time.
Removes many of the menial and repetitive tasks, the expense software will reduce processing times by an average of 25%.
3. Monitor: Improving efficiency
By switching to a digital process, finance teams gain access to smart reporting tools that provide realtime information on all company expense spend so any problem areas can be immediately visible.
A common problem with expense management is the way that processes are liable to deteriorate over time. For example, enforcing company expense policy, approval, or expense reporting. Without access to accurate information, it’s difficult to spot growing problems or identify performance issues.
This is a major benefit of moving to a digital approach. Reporting tools allow finance teams to access real-time information on employee expenses from across a business.
Expense reports that would take hours to collate by hand in a traditional method, can now be digitally compiled in a matter of seconds.
This gives finance teams the data – like pattern, trends, and spend visibility – required to keep improving performance. Identifying spikes and hot spots, teams can address potential issues before they become costly problems.
In summary, the inefficiency and complexity that has made expense management a traditionally difficult area can be a thing of the past! Today, the combination of mobile technology and automated processes creates a simplified and streamlined process.
It removes the administrative burden from finance tools and allows them to get back to basics. It ensures a fast, simple, and effective way to maintain your company policy and easily reimburse employees.