Why do we need an expense management system?
Expense management software is used by organizations to manage various financial functions. This type of system ranges from simple single-entry applications for tasks such as check writing and accounting to sophisticated double-entry solutions with advanced features. Complete platforms offer features such as inventory and invoicing. An expense management system can help your business in many ways, including eliminating manual tasks and automating repetitive tasks. It goes without saying that a high-quality system has become essential for small and large businesses.
5 reasons for you to automate your expense management system
If your expense reporting system is not adapted to your business, it can lead to financial drainage and an incredible loss of time and resources.
Here are some signs that your current expense management tool is not working and that you need to start looking for an automated expense management system that meets all your needs:
1. More paperwork
Although it is important to have a complete written record, you don’t want to go to the proverbial rabbit’s den at every audit. Not only do business travelers’ paper receipts disappear and become unreadable over time, but they are also easy to lose. If it is not possible to store digital versions of paper receipts, it is time to say goodbye to the current expenditure control system. It is very easy to get lost in piles of paper, which can lead to many costly mistakes.
2. Many human errors
If there is one thing you should never compromise on when it comes to the expenditure approval system, it is the wrong data. It may be the result of manual input errors or processing errors of human involvement in expense management. In any case, you cannot afford to make mistakes when it comes to financial data.
Managers and financial teams spend several hours a week reviewing stacks of receipts, ensuring they comply with organizational policies and approving claims for reimbursement, which represents many hours they do not have. If expense management activities are time-consuming for you and your employees, you should consider switching to another expense management software.
5. No mobile application
It is very important to record business expenses as they occur, in order to account for all expenses. If your company has many employees on business trips, you can’t do without a mobile application. A travel and expense management tool with a mobile application is useful to allow employees to send expense reports even when they are on the move, saving them time.
5. Difficulties in implementing policies
Reviewing reports and processing payments manually can easily become a full-time job for your financial team. It becomes difficult to apply companies’ expense policies when they have to go through the data lines and ensure that each individual expenditure is in line with the organization’s policy. You must be able to define employee travel expense policies within the expense management tool and the system must be able to identify expenses that violate the policies.
Expense management can be challenging, especially when it comes to multi-person processing costs. Without the right system, you’ll quickly get confused by the number of receipts. It can be difficult to create an audit trail if costs are not processed immediately, and finding the time to process costs as they arise can be just as difficult when you are a small business. Delays in processing and paying for personal expenses can cause problems in both personal and business cash flow. If you are late in paying for your employees’ expenses, you may have problems with morale.
Unfortunately, delays can be common when using a manual system, so it is worth paying attention to an automated expense management system. The IceHrm software is an ideal HR software for your company’s expense management. The IceHrm software is one of the best HR software which supports, payroll management, leave management, training, attendance and time tracking, and so many other features. The IceHrm expense management module handles all aspects easily and efficiently. You can experience bliss when expenses management, leave management, and payroll is seamlessly integrated. Let’s talk about the benefits of having an automated expense management system for your organization.
These are the most obvious benefits that companies derive from the use of advanced expense management system.
Take advantage of continuous savings to make smart decisions. It’s hard to define a business decision as a smart decision unless there’s real-time data on the table. Centralizing information through expense management tools helps managers’ report on all relevant performance indicators and make future decisions based on those reports. A strategy is critical to developing spending policies, calculating project costs, identifying opportunities such as better supply offers or overcoming the risk of non-compliance.
Compliance with internal and external regulations. Remember, compliance is always at the top of your list of priorities, regardless of the size/sector your company belongs to. Of course, neglecting regulations leads to unwanted taxes or reputational damage, especially if a regulation is not permanent, and you need to invest time to follow changes. The role of expense management programs is quite simple: they automatically track legislative changes and update system data to reflect them. Meanwhile, all stakeholders are informed of the change and how it will affect performance parameters.
Fair and consistent cost management. Are you sure you are fair to all your employees? Even the most confident of you will take a second to think about it because it is human nature that loses sight of these things as life gets more hectic. In expense management programs, rules are rules and there are no exceptions to rules. Solutions come from basic policies and employees know in advance what they are entitled to and what they do not have. This system also allows automated approval and payment, which motivates both applicants and confirmers to respond quickly.
Reduction of tax risk. Cost management systems are critical to the accuracy of your data because, unlike tedious manual calculations, they do not allow errors. This is because data is imported directly from company cards and service providers, which is also a good way to reduce costs. In fact, the expense management software is “know it all”: it distinguishes between legitimate and illegitimate expenses, organizes them into categories and consequently reports on each expense claim.
Increase in cost efficiency. To those who are hesitant: The introduction of a cost management system is already an economic solution. You buy the license and extend your internal resources to implement it, but there will be no recurring expenses to make you regret it. The very fact that you automatically import data and link the expense system to credit cards and payment channels is a reason not to question the accuracy of the reports you generate. So, appreciate the fact that you know how expensive transaction-based reporting can be and how long it can take to capture it manually. Overall, a cost management system is designed to give you a complete view of your spending, allowing you to negotiate discounts, reduce or transfer resources or even change entire business policies as needed.
Flexible risk management and fraud prevention. You’re right, there’s no 100% guarantee of success in taking risks. However, expense management tools have proven to be the closest to expense controllers and can quickly achieve savings with minimal implementation costs. With minimal implementation costs, we point out that you do not need to install an additional infrastructure, but you will use what you already have with all updates and maintenance changes.