It will almost be a year now since all of us were caged in our homes, working from there, never stepping out., thinking about our 2020 trips/ plans that are down the drain now.
Workaholics like me would’ve definitely thought about the business trips we planned for investor or client meetings.
Now that we’re getting used to the new normal, we are getting back on track, preparing for the regular business operations and business trips and meetings that we weren’t able to accomplish in 2020.
Travelling now needs to be more cautious and safe than it ever was before, thanks to COVID-19. These changes transform the travel expense management system and demand for a new and upgraded system. This is the right time to automate the procedure.
The Bastions Of Financial Management
Just like any strong structure, the financial management system has its roots in the main foundations that keep your company on track, no matter what problems you encounter. These three fundamentals are:
- Using the company’s past data as a guide to forecast and identify the future growth and cost-saving areas of the organisation.
- Investing in the right resources, people and technology along with the right plan to prioritise the long-term growth
- Understanding that each business is unique needs you to personalise your financial system to suit the needs of your company.
General Benefits Of Automating The Expense Management System
If your business still manages the travel expenses manually, you already know how much it costs to process one expense report; and in case you don’t, the Global Business Travel Association (GBTA) conducted a study and found that it costs (on an average) $58 to process one expense report!
And one manual error (which occurs in one out of five reports, giving it an error rate of 19%) can cost an additional $52 in correcting the mistake!
Even if we assume that your firm has five employees on a business trip, after having received their individual expense reports, you would have to spend $290 for processing those five reports, additional $52 in case there is an error in any one of them.
I know what’s going through your mind. ‘I can put this $290 to a better use! Imagine all the investments I could have made!’ That’s precisely what I’m trying to say.
Automation can minimise the expenses and give you error-free reports. It decreases the wastage of paper, admin’s work and the processing time. With automation, there are lesser to no chances of fraud expenses. Here are the general benefits that your business can receive by automating the manual expense system.
- Eliminates the need for paperwork
- Delivers error-ridden reports
- Improves the compliance rate of policy
- Prevents expense fraud
- Boosts the speed of approval and reimbursement
How Automation Boosts Financial Efficiency?
An effective way to support the pillars of financial management is to automate the expense management system of your organisation. If we were to take an example, imagine your current process of receipt collection or monthly expense report.
It takes so much time, is prone to errors and at times becomes frustrating for both the employees and the finance personnel. Automated expense management holds the capacity for handling the most complex tasks faster and with more accuracy as compared to the manual process.
Optimisation, as simple as this, helps you make better use of your finance team’s talents and speeds up your growth.
1. Amplify Financial Visibility
Having complete, real-time visibility of your company expenses is vital to eliminate the unnecessary spending and stay within the budgetary bounds.
Observing your business’s finances’ overview allows you to identify the areas of overspending better and streamlining opportunities. It aids in preventing policy violations/ frauds from slipping through the view.
With an automated expense management system, you can make more informed decisions, quicker than the manual processes.
With automation, your organisation can be prepared for the tax season, all year round and do not need to rush the preparations when the tax season is around the corner.
Apart from that, when the data is accurate and error-free, it allows you to make more accurate predictions regarding the company’s growth. Because it is all stored on a cloud platform, you can analyse the financial performance better – anytime, and without any divergence.
Periodic visibility, for which you need to wait for a month or a quarter to end, would not be quite helpful to you in identifying the real-time cash flow problems that are harmful to your organisation’s health.
The main reason being mentioned in that sentence itself – you need to wait for the month or the quarter to end. It does not give you real-time data like the automated expense management solution.
Hence, financial visibility is not only a benefit of the expense automation but also a necessity of the modern-day business.
2. Simplified Bookkeeping
For businesses both small and large alike, the more the growth, the higher will the expenditure be. And, just like a chain reaction, the more you spend, the more necessary it becomes to track the expenses through smart budgeting practices.
Expense tracking and management replace the time-consuming and erroneous manual process of managing the costs of the company. However, automated expense management simplifies the bookkeeping by cutting the reconciliation process for the finance personnel by a mammoth.
The system is programmed to minimise the errors and record the differences between the cashbook and the bank statement, thereby reducing the burden from the shoulders of the accountants.
When the program/ software carries out all the processes, it reduces the time taken by each operation. Automation accelerated both the reimbursement application approval and reimbursement.
The employee and the accountant do not have to send a written application or approval. Apart from this, the time wasted in addressing errors or delays in expense report submission are reduced with the help of the automated systems.
The programmed system allows integration with expense tracking systems and reporting systems or more complex solutions like cloud based payroll software. All these benefits combine to make the bookkeeping process as simple as possible and helps you have more control over expenditures.
3. Elimination Of Human Error
The benefits of automated expense management get doubled when you start observing the drawbacks of the manual system.
Human errors, lag time and inefficiency, become the odd ones out when compared to the automated system. As mentioned above, approximately 19% of the expense reports are erroneous.
Automating the expense management process reduced – almost eliminates – the chances of errors. The reason I wrote ‘almost’ is because the application still feeds on information provided by human hand, and there is a fair share of chances that the person entering the data made mistakes while doing so.
Human error does not take place only while entering the data. Automation can reduce human error by minimising the use of paper receipts and reducing the use of paper as the process is automated and completed in the computer.
The automated system saves time of the accountants by accelerating the processes’ speed. The approvals and validations are carried out through the software system and therefore, do not require a long time in waiting for written permissions.
It brings an end to the repetitive manual processes viz., data entry, data correction etc., thereby enhancing the efficiency and productivity of the process, and it eliminates the clerical mistakes.
4. Avoid/ Catch Frauds
As much as you believe in your employees, you do not want to rely on the benefit of doubt when it comes to the company’s finances.
It is effortless to commit an expense report fraud, and it is even easier to miss the same when handling the system manually.
There are four types of expense report frauds that can go unnoticed in the manual process:
- Duplicated claims are those when the employee submits the same reports over and over again either with the intent to deceive or unknowingly.
- Falsified claims are the ones where the employee tries to submit the falsified cheques, invoices, or receipts with the intent to receive reimbursement for the amount of money that they didn’t even spend.
- Inflated expense claims are those where the employee alters the paper receipts to receive reimbursements larger than the amount they actually spent.
- Mischaracterized expenses are the ones where any expense reports that contain the requests of reimbursements for non-business expenses/ personal expenses are labelled as business expenses.
Automated expenses management overcomes all these frauds by instantly matching the receipts to purchases and detecting any inflated, mischaracterized or falsified claims.
The automated apps identify the reimbursements for out-of-policy expenses (as mentioned in mischaracterized claims) and halt refunds for the same.
In the case of duplicated claims, the automated system contains a program that checks the historical costs to find any matches.
By automating your company’s expense management process, you are laying the foundation for robust financial management. It enhances the way your business operates, making way for more efficient and controlled spending, saving and investing.
You may have hired the best people for your organisation’s finance department yet you may be under utilising their talents by letting them spend their majority time in reconciling reimbursement, reviewing expense reports and performing the routine and tedious tasks.
These tasks invite more fraud and error into the organization and cause inefficiency into doing what otherwise should be a simple process.
The employees too, might consider the lengthy process as a headache and may refrain from doing so, increasing the time wasted by them during the working hours.
Don’t let your talent, efforts and money go to waste – implement automation in your expense management system.