Benefits of an Expense Management System
It is unlikely that you have given employees free access to your business checking account and allowed them to withdraw money at their discretion. Although this scenario may seem absurd, any employee with an expense management spend their money just as freely.
As with many other aspects of your business, technology can reduce the burden of managing and controlling employee spend, often a lengthy and time-consuming process.
Traditionally managed through manual paper-based processes, travel and entertainment expense management is a complex business process that encompasses both government regulations and employees’ personal time and money. Despite these concerns, there is certainly a lack of control to ensure that these expenses are in compliance with corporate policies and a general inability to collect sufficient data about these expenses while keeping administrative and processing costs low.
Cost management software offers a number of benefits to entrepreneurs:
Law enforcement support. The software can be programmed to report and even reject items that are not valid operating costs. Limits can also be set on expenses such as lunch and accommodation. Although it is possible for an employee to bill for a massage in their hotel room, the cost management software can ensure that your company does not pay the bill.
Efficiency gains at all levels. Employees can use software to download expenses and related receipts as they wish, and the report automatically undergoes a customized evaluation process for your organization. Managers and financial service providers can analyze the reports generated from the collected data. Software is often compatible with existing payroll systems to facilitate reconciliation and payment.
Monitor and analyze corporate credit cards. Many expense management software programs are designed to complement corporate credit cards, allowing managers to view activities in real-time and better manage risk. Depending on the system, it may be possible to reconcile spend and create permanent digital records corresponding to Internal Revenue Service with a single click.
Better information. expense management software offers a variety of ways to monitor spending. Want to know how much money is spent with a particular supplier? Or track spend by department or by a person? Automated systems allow users to easily create reports that detect potential inaccuracies or misuse.
Currency conversion. International travel and related currency matters can tax the most competent accountants. The software easily converts and calculates exchange rates for accurate reporting.
Most organizations believe that implementing expense management software saves money. Employee expenses are an integral part of the business activities of many companies. By outsourcing the management of their expenses, many entrepreneurs and managers find that they can better monitor and even reduce their costs.
Automated expense reports can help your company control costs automatically you guessed it. So if you haven’t automated your company’s expense reporting process yet, it may be time to seriously think about it.
Most people take the opportunity to make their lives easier. After all, we live in a time where we automate almost everything from paying bills and paying for food to tracking the food we eat with our smartphones.
Because by making things easier, we often have the opportunity to make better use of our resources and maximize our results.
Smart business is no different. For decades, growing companies have been introducing HR technologies to do better, grow faster and make more money. And the automation of expense reporting should be a logical extension of the same concept.
When it comes to protecting your company’s financial assets and making better financial decisions to help you take your business to the next level, automated expense reporting can be a powerful tool.
Here are four reasons why it’s time to consider an expense management system;
1. Making better financial decisions for your business
Let’s be honest. If you don’t have all the information you need, it can be difficult to make the right decisions. And shooting in the dark when it comes to making sound financial decisions for your business has not taken you where you are today.
You need to have an overview, including a clear and predictable understanding of where your company’s money is going.
Whether you’re the only one spending, or you have a world-class field force dedicated to increasing your revenue, automating your expense reporting processes gives you valuable data analysis to plan for the future.
With this information immediately available to you, you may wonder:
- Have expenses increased on a quarterly basis?
- Do I have expenditure guidelines that I can apply consistently and accurately?
- Do I have the information I need to negotiate reduced travel and living expenses?
You may even have to wonder if you have the capital to expand your year after year. It is useful to have a pulse where you have been to know where you are going. Answering these difficult questions can tell you a lot about the direction of your business.
By automating expense reporting, you can collect smarter data on your company’s expenses in order to make more strategic decisions about your business.
2. Less tax anxiety
Improving accuracy and traceability is probably one of the most obvious benefits of automating expense reporting. But what may not be so obvious is the secondary benefit of trusting your accounting practices: Peace of Mind.
If you are like most business leaders, would you make every effort not to be exposed to the pace of an IRS operational audit, right?
What if those efforts had not consisted of searching for documents and evidence that may or may not have been properly filed? By automating your expense reporting, you have the process under control to more proactively manage your expenses (and accounting) and help you stay on par with the IRS.
While it is true that audits are sometimes random, the IRS uses a statistical data formula to verify tax returns as part of its national research program.
This means that any inconsistency in your company or person’s tax return (business-related) could trigger a series of red flags and cause the IRS to knock on your door.
So unless your company is an accountant, or you like the IRS tax plate alphabet soup, an automated expense reporting system can help you avoid hot water.
Most automated platforms allow you to set rules in advance to ensure that expenses are incurred in accordance with a tax or related regulations that may affect your business, your employees or your industry. As things move at the speed of the business, an automated system can detect non-compliant expenses that you might otherwise miss.
With an automated reporting system you can trust, you can gain confidence in your processes and even reduce your chances of being audited by the IRS. You’ll also be able to focus on what drives your business.
3. More efficient salesforce
A motivated sales force can do wonders for your results.
Perhaps part of this motivation comes from their true passion for what your company has to offer. You have probably also considered (and perhaps integrated) benefits such as sales-based incentives or other gifts and awards for extrinsic motivation.
But what if your team loses energy looking for potential customers because of frustrations that can easily be eliminated?
Frustration: tracking and keeping receipts for travel and entertainment expenses. This may seem trivial, but it can have a real impact on the way your team works.
It is probably logical to say that you would prefer your team to do business in person rather than by phone or email. Automating your expense reporting process can facilitate this human connection by simplifying transactions that promote personal interaction.
An automated expense reporting system with mobile functionality gives your team the tools they need to quickly record expenses, eliminating the need to keep paper receipts and reducing the probability of errors with integrated corporate card transactions. Combine document reading functionality with integrated corporate card transactions and your business and users will benefit from efficiency and accuracy.
In addition, employees can be paid more quickly through automated workflows. And who doesn’t want to get paid faster?
4. Greater employee accountability
Self-service allows your employees to take ownership of the expense reporting process from start to finish, and to do so from their computer or smart device.
As an added bonus, since your automated platform will likely include integrated guidelines something that paper-based processes cannot provide it can help make policies and procedures more enforceable. It also allows employees to do their part to ensure compliance.