Expense reimbursement, an important aspect of company finance, should be handled properly to avoid distress on the employee and the organization as a whole. There is an intense need for companies to use expense reimbursement software to ensure measures to curb fraud, increase compliance and eliminate unnecessary processes are implemented accordingly.
Through seamless expense reimbursement, businesses can generate expense reports for auditing and financial health evaluation.
What is Employee Expense Reimbursement Software and Why is it Important?
All businesses need to track where the funds go and reimburse employee expenses. However, not all businesses realize the need to automate financial processes for more reliable expense reports. An expense management solution provides you with control and real-time visibility of your expense reports financial records.
Moreover, expense reimbursement software increases employee productivity and improves business processes. Expense management software refers to an app, platform, or software that allows companies to record, track, verify and process reimbursements without the hassles of manually performing all these tasks.
Indeed manual reimbursement processes consume time and incur errors when having to fill out spreadsheets and claims forms. In general, the tedious process of manual expense reporting is killing your team’s efficiency.
Expense reimbursement software is important for a business to track business expenses, improve workflows, and thrive in a world that’s radically shifting towards digitization.
Manual Expense Reimbursement vs Automated Expense Reimbursement
Efficiency and productivity are the two main differences between manual expense reimbursement and automated expense reimbursement. If employees submit travel booking receipts manually, time and money are consumed impacting the productivity of the entire team.
Usually, you’ll need more than two accounting staff to process a reimbursement claim. These two people will incur wages and benefits that will be paid against the company funds. If the staff succumbed to human error and entered reimbursement data incorrectly, then they need to repeat the entire process and productivity levels of the team decrease.
In the case of automated expense reimbursement, data are generated from digital receipts and invoices so errors are minimal, if not none at all. The best expense reimbursement software also takes charge of all the processes allowing businesses of all sizes to reassign staff and fulfill other tasks. You’ll get a clearer understanding of the benefits of automated expense management or travel management solutions by knowing how does expense management system works.
Some of the differences are further expounded below:
* The complexities of seeking approval
Reimbursements of business expenses start with an employee submitting claims for approval. Depending on the company policy, manual approvals may take layers of evaluation and card reconciliation.
The process can involve up to five members of the finance team to screen the claims and examine the expense data. Initial processes of approval include converting currencies used during a business trip, mileage tracking, and manually computing total spending for a day. This is important to make sure the employee has complied with the per diem budget allotment or the business travel policies as a whole.
Using expense reimbursement software solutions like Spenmo streamline workflows by allowing the upload of receipts through mobile app and automatic entry into the system. This also comes easy when employees submit credit card statements of accounts or records from their bank accounts.
The system can identify expenses within the company policy, copies the details, and disregards information that may not be accepted as an employee expense by the company and the IRS.
The tedious verification
All travel expenses and receipts need to be confirmed. Employees can submit fraudulent documents or receipts for purchases that were not incurred or that were not within the company reimbursement policy. Without the use of expense report software, verification may take an entire day or even more especially for group trips or unusual company supplies purchases.
Verification for automated expense reimbursements happens in minutes. When a corporate card is linked to an expense wallet, the details are automatically matched and are efficiently cross-referenced. This streamlines the workflows and eliminates manual errors within the expense report.
The possibilities of fat-fingered manual entries
Manual data entry is more prone to errors and employees doing the task of entering expense claim details could not complete multiple tasks at the same time. Errors are detrimental to the company’s fund. It can either lead to over-reimbursement or under-reimbursement. In both cases, that means a repetition of the entire process and another set of time, money and effort wasted. Again, automation can help get rid of human errors within the expense management platform and ensures data entry is seamless and factual.
What are the Real Benefits of Expense Reimbursement Software for Businesses?
Business owners should track and manage the full cost of doing business. Automated expense reimbursement software can simplify the expense claims process and can lessen the occurrences of incorrect disbursements. Automation also promotes easy expense tracking and approval process.
Employees are claiming reimbursement because they used their money or credit card to pay for something that could benefit the business. If it takes too long for them to have their money back to their bank accounts, employees begin to doubt the company and feel dissatisfied with their jobs. This could even result in noncompliance and loss of motivation.
Paying out employee expenses accurately and on time can lead to high employee satisfaction which can motivate them to work and be more productive.
Enforcement of expense policies
The manual reimbursement process is not customizable and may neglect policy violations. If you’re using an automated expense management process, then you can customize it to identify policy violations and track expenses according to the company procedures. The system will reject reimbursements that go beyond the policies set by your company, thus trimming down possibilities of fraud and overpayment of employee expenses.
User-friendly expense management software is usually integrated with features like invoicing, ERPs. time tracking, accounting, receipt management, and automatic data entry. These functionalities in software solutions lead to employees or the finance team consuming lesser time on mundane tasks that are repetitively accomplished for one expense claim alone.
Once efficiency in spend management is implemented by simple and short processes, then your business can see improved cash flow.
In the US, expense fraud costs employers around $2.8 billion per year. for fraudulent travel booking and other claims. Managers and the finance team may have a huge chance of overlooking fraudulent claims when it comes to manual reimbursement. By using the best expense management solutions, businesses of all sizes can check, access, and modify payables beyond the company’s policies and erroneous entries.
Financial health visibility
With one look at the expense management platform, business owners can easily conduct expense tracking, analyze the data entry, and understand where the money goes. Employee expenses through cash, corporate card, or credit cards can be tracked in one dashboard showing which department is overspending and which travel expenses need to be reviewed.
Financial health is an important aspect of every business. Ensuring that the company’s money is spent properly and no policy violations are made by employees can help businesses of all sizes come up with better spend management solutions to make wise decisions on budgeting and spending.
Readiness for audit and simplified reporting
With the use of an expense management solution, the entire team can access financial information through a mobile app. The team can analyze travel booking information in real-time and can verify pricing, mileage tracking, and other information immediately. Automated expense reimbursement allows anyone to streamline and generate expense reports by department, by the employee, by project, by month, or by category. Depending on the custom setup you implemented initially, businesses can do expense reporting according to your business processes.
Choosing the best expense reimbursement software can be difficult at first since most business owners may not understand how to implement digitization in their processes. But once the team has decided to use expense reimbursement software, it is easy to improve productivity and efficiency in no time. The entire spend management solution can minimize errors, overspending, and overpayment for better financial health for your business.