Even if you’re a small start-up or a big multinational corporation, the fundamental challenges of controlling staffing costs remain unchanged. You need an effective and convenient way to compensate employees at all costs.
Employee expenses remain an aspect of financial management that many corporations have trouble handling properly. This leads to sluggish, inefficient control of costs, and tends to cost valuable capital to businesses.
What’s all about The Expense Management?
Expense management is a mechanism for the procurement, authorization, and payment of personal expenses by an organization. It also includes the audit process in order to ensure that they are legitimate. This does not only include costs for transport and entertainment.
When a business traveler seems to be on the trip on behalf of his company for a commercial purpose, they could incur additional expenses, including accommodation, transportation, food, etc., which the employer typically pays for—done with a strategy of effective repayment of costs or by the routine implementation of a schedule for the cost control.
Expense management requires policies and procedures for the processing and analysis of data related to such expenses, as well as software and facilities used for their processing and analysis.
The need for Expense Management??
Well, these expenses form a huge part of the organization’s working and efficiency, and especially for a huge organization, these expenses form a huge chunk of the overall company expense, as they have a responsibility of reimbursing these said expenses after approving them. If not managed efficiently, there could be a possibility of the employees taking advantage of the organization’s resources.
You will be able to maximize your productivity and save time and cost simultaneously with a cloud-based system to handle your company costs.
Users can build and adjust the expense reimbursement plans to the form of expense incurred with Expense Management. One will be able to define expense categories for each type of expenditure to monitor the relevant details.
About the process?
Expense management involves the capture and submission of expenditures, including the filing of claims, approval, or negation of claims, the planning of payment claims, and finally, the repayment of an employee. The cost management is a cross-process.
Costs are monitored, the system cannot be abused by staff, and appropriate corrective mechanisms can be enforced. Costs control has a range of steps from employees who report expenditures to the company reimbursing them.
First, an organization can opt for either the traditional system or an automated system.
Let us take a peek at the traditional system.
This is a comprehensive process.
- The employee makes an expense.
- He/She will collect the bills for the expenses incurred.
- These bills are submitted to the organization after compiling a detailed expense report.
- The expenses are reimbursed only after the approval of this report.
Although this system was used for a long time, The traditional way has its disadvantages:
- This involves maintaining huge paperwork and long excel sheets.
- This is a long and tedious process.
- The amount of time consumed is high.
- Detection of fraudulent claims is difficult.
These disadvantages in the traditional approach paved the way for a new technology enabled, more efficient, superior automated expense management system.
Let us have a look at the automated expense management system.
An automated expense management system utilizes software that carries out the different tasks performed in the traditional way. The process looks something like this:
- First, the employee logs in all the details of the expenses into the software.
- The expense is then submitted.
- The company then approves or rejects the expenses.
- If the company approves the expense, then a report is compiled and is stored.
- If not, a digital audit trail is initiated.
Why should you automate your expense report procedure?
Research shows that adopting an automated management process saves companies a lot of time and money. This is worth automating the process itself. This implementation will make employees more accountable for their claims.
Manual work involving data entry, comparing, evaluating the expenses is greatly reduced with the automation. The software offers a one-stop solution for all the challenges of traditional expense management.
It will increase employee morale due to the decrease in the time needed to pay the costs they incurred.
- Increasing transparency with the organization:
As all the records are available for the employees and the company, the process becomes much more visible for everyone involved. This develops a sense of trust between the employee and the company.
- The burden on the manpower reduces:
All the data entries, evaluating, approving, or rejecting by the manual employees is greatly reduced as their job becomes more simplified.
- Monitoring of the data:
All the data that is gathered by using the software can be analyzed by appropriate tools. This aids the company in getting an overview of all the expenses, thereby helping the company to keep track of the number of expenses incurred on various activities.
Now that we have seen that the automated system is not only efficient but also time-saving, the companies need to know which software suits the best for them.
These are the aspects one must consider before choosing the right expense management software:
- It is important to choose software that has the best features offered by the industry.
- The evaluations of all the applications currently in existence must be considered to get a better view.
- It is crucial to efficiently implement the chosen software. Hence the organizations must ensure that the technology adapted is easily usable by the employees.
- Good customer support services will aid the company in order to handle any glitches the software may face in the future.
- Modern problems require modern solutions. Therefore the companies should focus on the technologies that solve everyday problems effectively.
The expenditures of 8-10% of traditional company funds are because it offers more incentive to fulfil the financial requirements of processing and paying employee expenses that have a direct impact in the context of bottom-line control of expenses. There are different reasons for incurring such costs, which includes workers who remain at another place for business or services.