Unfortunately, many SMEs still rely on tedious and time-consuming paper-based processes to authenticate employee applications for expense reports, reducing employer and employee productivity. Without centralized and structured management of travel expenses, lengthy amounts of time are spent by employees recording the dates of their travels and each expense made on their trip – time which could be better spent on meaningful work for your organization.
While the fault for this doesn’t lie with any one party, the system itself is clearly flawed and an alternative is needed – one that efficiently tracks travel expenses in a centralized system, speeding up the authentication, approval, and disbursement of claims.
What are travel expenses?
Any cost associated with the travel for business-related activities is considered a business travel expense. If they fall within a reasonable amount and are specifically for business purposes, such as conferences or meetings, these expenditures can be deducted by the business as a travel expense.
How is a travel expense reimbursed?
Traditionally, an employee fills out an expense report with the dates of travel and the details and amounts of all claimable expenditures made on the trip. The form, as well as all supporting documents, are then submitted to Human Resources and the management team for authentication and approval before the amounts are reimbursed to employees.
The duration it takes to complete the entire process is dependent on how efficiently employees fill up and submit these forms, how long HR takes to authenticate each document submitted by the employee, the amount of time taken by management to approve the reimbursement for claims made and finally, the gap between approvals and bank processing.
What documents are needed for travel and expense management claims?
Documents needed to process an employee’s travel expense claim typically includes:
- Flight or transport tickets
- Conference or event itineraries
- Accommodation and travel bookings
Allowable business expenses are generally expenses that can be claimed as deductions against your business revenue to reduce the tax paid. These are based on guidelines set out by the Inland Revenue Authority of Singapore (IRAS).
The following are generally considered allowable travel expenses which can be claimed as corporate travel expenses and deducted from company revenue:
- The cost of travelling on public transport for business
- Utility and telephone charges used for business purposes
- Maintenance of motor vehicles used for business purposes such as transporting items or employees
- Asset repair costs while on a business trip
- Accommodation fees for business trips
Meanwhile, disallowable travel expenses are those which fall outside this category and are not claimable from the business. These expenses are disallowed under the Income Tax Act because they are not wholly and exclusively for generating business income.
Examples may include personal travel expenses or extravagant meals or experiences made on business trips that are not for networking or business purposes.
The cons of manual travel expense management
The claims application, authentication and approval processes for business travel expenses all eat into the valuable time of employees, HR and management – time better spent on more meaningful work for the organization.
The following are major pain points of manual travel expense management:
When authenticating employee expenses, HR may spend hours sorting through claim applications to distinguish allowable claims from the disallowable – which can be a time-consuming process that ultimately impacts their productivity.
Approval from management can also be challenging and is often delayed, particularly in large organizations where business trips are common, and employees travel regularly.
Not only are these processes tedious and time-consuming, but they also leave more room for errors and oversights, both from the employee and HR. This can lead to mismanagement of large business travel expenses, potentially hampering company growth.
Costly and time-consuming
The cost of processing reimbursements of business travel expenses is often high such as the salary of finance teams handling expense management and resources used for reporting. In terms of workflow, claims submissions and processing can chip away at employees’ hours and productivity – leaving them with less time to execute profitable work for the business.
Delays in reimbursements
What’s more frustrating than waiting on delayed reimbursements?
Bank processing times can take weeks from the date of claims approval – causing resentment and impatience in employees who find it difficult to plan their monthly expenses.
Employees may find it frustrating to constantly plan around unpredictable claim reimbursements. An individual in the company may be planning their monthly expenses to save a portion of their salary but an unexpected business trip could throw a wrench in their plans – particularly when reimbursements for the travel expenses are delayed which commonly happens.
Slow claim submissions
Employees are often strapped with work that requires more immediate attention which means that bureaucratic requirements such as expense reporting for travel expenses can fall by the wayside until urgently required.
This leads to a domino effect of delays, with HR’s authentication process and management’s approval also being held up due to late claims submissions.
Vague travel expense policies
When expense management is done manually, travel policies can fail to be specific or explicit enough for employees to fully understand. This can lead to errors in judgement when spending on business trips – only to find out later that their expenses are not claimable.
This confusion may lead to a hesitancy among employees to travel or spend during business trips, leading to a more stressful experience when travelling. This also increases the chance of discrepancies in reporting by HR who are tasked with distinguishing between allowable and disallowable expenses.
Embracing an automated expense management system
The good news?
Many organizations are now turning to automation software to solve their spend management woes. Expense management solutions can automate, centralize and streamline travel expense claim reimbursements by creating the following:
A centralized system
By automating the expense management process – claims submissions, authentication and approvals, all members of the company share a bird’s eye view of travel expenses in a centralized location on the platform.
This streamlines the process as claims are moved from one stage to the next automatically, without the need for manual paper-based processes, back-and-forth e-mail communication and time spent authenticating each expense individually. For example, travel documentation and receipts can be uploaded directly onto the expense management platform by employees, allowing HR to easily access them without sorting through piles of paperwork.
Less room for errors
With a systematic way for employees, HR and management to input accurate expense data using expense management software, errors in the reimbursement process are less likely to occur. By eliminating the need for manual paperwork, human errors in claims submission are taken care of and employees can rest assured their reimbursement amounts will be accurately recorded and paid out promptly.
Specific and clear guidelines on allowable expenses
With pre-set options and categories for allowable expenses on an expense management platform, employees can be more certain about what is reimbursable on a business trip and what isn’t.
This eliminates any opaqueness surrounding travel expense policies, allowing employees to confidently travel and spend on what’s necessary with more clarity that it will be compensated when they return home.
Expense management systems help with accurate and real-time expense tracking especially when it comes to travel and expense or T&E management. Spend management software, like Spenmo, allows business owners to issue corporate cards to employees, where spending records are instantly captured, stored and processed without the need for unnecessary filing and manual authentication by HR.
Meanwhile, by reducing time spent on authentication but also claims submission, both employees and HR can spend time elsewhere on more valuable tasks for the organization. Manual expense reporting is eliminated and is now replaced with receipt scanning features that allow employees to snap, log, and submit receipts for expenses incurred while travelling.
This improvement in productivity and reduction in expense management costs will be invaluable in driving your organization’s growth.
In small to medium organizations, it can be common for employees to be lent a manager’s credit card on trust to make purchases for the business. For example, a salesman may borrow his manager’s corporate card on a trip for his expenses. This arrangement lends itself to a host of security issues. When trust is misplaced, and employees overspend – or worse commit fraud using said credit card.
Instead, by assigning corporate cards to each employee which are linked to a centralized expense management platform, the risk of fraud is eliminated and spending limits are placed ahead of time to avoid overspending.
Reconcile and close accounting your books faster
Gone are the days where finance teams chase over employees over their monthly expense reports. Most expense management software can centralize all of your corporate and travel spend into one dashboard and easily reconcile your accounts payable with the accounting software of your choice. Not to mention the time saved in the reporting process.
Choosing the best expense management platform for travel
Selecting the right expense management software solution can be a tricky decision depending on an organization’s specific needs. When looking at the right solution for your organization, consider the following:
- Ease – a solution that allows employees, HR and management to easily use and set up quickly
- Control – a solution that allows management to freeze spending for employees remotely
- Security – a solution that prevents fraud and reduces errors in data input, ensuring accurate claims disbursements to employees
- Clarity – a solution that assigns pre-approved funds to avoid overspending
- Time – a solution that instantly captures employee travel expenses in a centralized system
With a host of tools and solutions available to improve business processes, there is no reason for businesses to endure the pains of manual expense and travel management. However, choosing the right expense management platform for your organization is crucial. Automate your claims reimbursement process today with Spenmo corporate cards to discover how simple claims can be!