With straight-through processing, businesses can streamline operations through speedier financial transactions with fewer risks of human errors.
8 Ways finance leaders can benefit from technology
Finance leaders benefit from technology since it improves productivity, corporate decision-making, operations, and practices in the finance department. When exploring automation, we must evaluate the size of the business to determine which product is appropriate. Businesses may improve operational efficiency and boost productivity by using a smart system that can analyze data in real-time. Digitization of processes is the key to moving forward.
In a report, small enterprises lose money annually due to outdated ways of managing a company’s financial processes. Businesses spend most of their time on vendor management, banking, payroll preparation, expense management, and business reporting.
Manual expense management leads to a greater chance of human error and expense fraud. Without realising at once, business owners are gradually suffering the perils of an unproductive workforce, with unsatisfied employees having no visibility of reimbursement processes.
At a glance, manual expense reporting seems to be detrimental only in the aspects of productivity and time. Still, as we dig further, we come to understand how automation could streamline this outdated business process.
Your small business might be doing well with manual expense reporting for now. But as you strive to grow, you’ll see how this can damage your processes and can make an irreversible impact as you expand ahead. Here are the reasons why you should eliminate manual expense reporting:
1. Mistakes Are Inevitable
A system or process manually accomplished is prone to mistakes. Wrong inputs of dates, names of employees incurring the expense, and even the total amount of money spent can hurt your business. Considering how employees can be distracted by varying conditions at the workplace, it is inevitable that mistakes are begging to occur frequently.
2. Manual Expense Reporting Comes With Hidden Costs
Sure, you know you’re paying professionals to do the math. However, you’re actually spending more on manual expense reporting. In fact, it takes an average of seven (7) days to process a simple expense claim. You might be paying more for a few hundred dollars to reimburse an employee from expense claim submission to approval. The hidden costs can drain business resources, especially when receipts are lost and all documents need reconciling.
3. Expenses Going Over The Limit
Manual expense reporting usually comes with inefficient expense claims policies. Even with efficient budgeting, there are instances when employees exceed their allotted budget, and business owners sometimes have no choice but to refund the expense.
Automated expense management solutions allow managers to control spending prior to payment, making it impossible for employees to spend more than their allotments.
4. Expense Reimbursement Fraud Is Difficult To Detect
According to the 2020 Global Study on Occupational Fraud and Abuse, it takes two years for expense reimbursement frauds to be detected. The fraudulent employee may have already left the company before business owners realise that much of their funds were taken away from them through expense claims.
5. Limited Compliance To Expense Claims Policies
The company’s expense reimbursement policies guide employees on proper corporate spending and expense claim filing. Manual expense claims and reporting problems stem from faulty and inconsistent policies and processes. Often, fraudulent activity is discovered after the fact before the audit committee takes action.
6. No Or Less Visibility Of The Reimbursement Process
Expense reimbursements result from businesses borrowing money from their employees to fulfill their duties. In other words, the management lets employees spend from their pockets which the company then pays back in due time.
However, employees have no idea about the status of their manual expense reports when submitted manually, which often leads to employee dissatisfaction. Worse, employees tend not to work as expected until they get their money back.
7. Stunted Opportunities To Scale Up
Manual reimbursable expense accounting can hinder small businesses from growing. Employees begin to get overwhelmed with the increasing workload. Irreversible human errors start accumulating as expense claims pile up. The negative impacts of manual tasks will worsen hidden costs and employee productivity.
Travel costs are the most common spending submitted in an expense report. In a typical office scenario, the employee only files the report upon arrival from the trip. They need to keep their receipts for the duration of the trip, which becomes problematic because reports don’t come in at the time of expense. As a result, employee reimbursements are delayed, and deadlines for month-end accounting reports are missed due to lengthy approval processes.
Cloud-based fintech solutions that automate payments centralise the claims process and approval workflows for the accounting and audit team, wherever they may be.
While there are a lot of challenges to overcome before taming the pains of manual expense reporting, there is one imminent solution business owners should consider. That is, embracing technology to improve tedious and repetitive business tasks such as employee expense claims.
Spenmo, automated payments, and reconciliation platform helps businesses keep track of every employee’s spending to prevent small businesses from falling prey to fraud and massive hidden costs. Spenmo is a one-stop solution that allows you to
- Go paperless. Save time retrieving physical receipts, invoices, and other documents for reconciliation.
- Free corporate credit cards for every employee. Say goodbye to lengthy expense claims reports. Managers can assign multiple corporate credit cards to each employee, allowing them to control credit card budgets and limit card use according to the expense categories relevant to the employee.
- Track real-time payment updates. Spenmo lets you see payments and expenses incurred in real-time. There will be no delays in detecting overspending.
- Control spending. With Spenmo’s virtual cards, managers can automatically freeze or unfreeze an employee’s account whenever deemed necessary.
- Instant integration with accounting software. Spenmo’s seamless and quick integration to Xero or any accounting software of your choice allows finance managers to close month-end reports in 80% less time.
- All-in-one b2b payments software. Manage and track internal spending, employee expense claims, payroll, automated bill payments, approval workflows, and accounting reconciliation into an integrated view.
Talk to our team to get a Spenmo card today!