Regardless of whether you are managing a small startup or large corporation, every dollar and cent counts. This means that tracking of the company’s expenses is integral in managing the finances and profit efficiently. Inaccuracies in numbers and data can have a significant impact on the company’s finances if not resolved quickly.
If your organisation is still managing expenses manually with paper receipts and excel spreadsheets, chances are that these expense records have data entry inaccuracies from time to time. As the company expands, the complexities of expense management are likely to increase in tandem. Even though traditional expenses management and reimbursement may work well for your employees, with continued manual expenses management, this could result in large corporate risks and have a significant impact on the company’s finances.
Here are some of the few challenges associated with manual expenses management and how companies can address them.
Unclear expense policies and processes
Lack of clear expense policies and processes makes it difficult for payroll staff to review and approve expenses claims. Particularly when expenses are handled manually, this means that staff and reviewers have to manually check each expense item to ensure compliance. This means reviewing expense categorisation, amount claimed and whether it is compliant with the organisation’s internal policies. Inaccurate expense classifications and wrong figures can result in expense non-compliance, resulting in loss of time and monies for the organisation. Furthermore, manual expense management makes it difficult for organisations to track every employee’s expense against the organisation’s policies, which increases the likelihood of fraudulent claims. All these eventually add up to additional costs for the organisation.
Delayed employee reimbursement
Most organisations will agree that wasted time translates to money lost. This is certainly true when it comes to the traditional paper-based expense management. Manual paper-based expense tracking and reimbursement is time-consuming and risks high data entry inaccuracies. This could be attributed to the time for employees to consolidate their receipts before submission to HR, followed by manual review and approval before entering into the payroll system for reimbursement. This entire lengthy process eventually delays the entire expense reimbursement process.
Lack of expense visibility as business expands
Manual expense management provides poor visibility on the entire expense process. The complexities in managing and reviewing expenses are further exacerbated as the business expands. It becomes extremely difficult for reviewers to keep track of employees’ expense claims, whether it is compliant with internal financial and HR controls, duplicated submissions, or false expense claims. With paper-based expenses management and excel spreadsheet checking, there is a high possibility that inaccurate expense entries will go unchecked and unapproved. Likewise, this eventually imposes additional costs to the organisation.
The solution lies in automation
With all these challenges associated with the manual expense management, the bottom line is to automate this administrative and time-consuming process. Advancements in technology today have made it extremely easy to monitor, track and review employees’ expenses by using a comprehensive expense management software.
Many businesses today adopt cloud-based software to automate their expense management system. Expense management policies and procedures can be easily set up within the expense software, facilitating the submission, approval and reimbursement process. Concurrently, it enforces compliance with internal controls and regulatory requirements.
What makes a good expense management system?
A good expense management software should be able to integrate seamlessly into the organisation’s existing payroll software. This eliminates the need of manually transferring approved expenses data into the payroll system for processing. Approved expenses will automatically be synchronised into the particular payroll period for the month, reducing the chances of human error as opposed to manual expense transfers. This ensures that payments and reimbursements are timely and accurate.
For business with an existing expense management software, it is crucial to review internal procedures and policies from time to time to ensure relevance. Some key questions to ask could include: is the approval and reimbursement process simple for payroll staff? Are the existing policies compliant with the latest labour laws and legislations? Periodic reviews of the expense management process will help to maintain compliance while driving process efficiencies.