Using spreadsheets to manage business expenses puts your company at risk, ranging from errors, inaccuracies, and loss of employee productivity, to financial and legal non-compliance.
Spreadsheets are great tools for basic data analysis, presentation, and data storage. They were never designed to manage business-critical processes such as expense management.
The dangers of continued reliance on spreadsheets in the expense management space can have a huge impact on your bottom line. Managing expenses “the way we have always done it,” creates unnecessary risk in our digital age.
1. Data security and backup for business expenses
The majority of businesses using spreadsheets for expense management rely on un-encrypted email or basic password protected content. The mass storage, speed, and ease with which companies can analyze large data sets has revolutionized business. However, the safe storage, backup, and protection of this data is more important than ever. Unsecured or improperly secured data puts your company at risk from hackers and can jeopardize your business.
2. Increased risk of expense fraud and manual error
As the amount of manual input increases, so does the margin for error. Incorrectly entered merchant details, purchase amounts, and tax codes will increase the finance team’s workload, and in some cases could delay reimbursement of expenses as reconcilers identify and correct errors.
Spreadsheet expensing require a significant amount of manual input. A sales employee logging and submitting expenses at the end of a month may have dozens of receipts to type up.
Spreadsheets also put a business at higher risk of expense fraud, both intentional and accidental. Just Google ‘fake receipt creator’ and you’ll see multiple articles outline the ease with which an unscrupulous employee could commit expense fraud. It’s alarming to realize how easily a determined employee can defraud their company, especially if that company relies on a manual, spreadsheet system to track business expenses.
Leading expense management platforms feature transaction matching technology, meaning the platform requires matching purchases to card transactions manually. In addition to transaction matching, manual processing requires duplicate detection (i.e., expenses confirm that an expense has only been submitted once). If companies could combine these two processes digitally, it would significantly reduce the amount of time necessary to manage spending, and the risk of error or fraud.
3. Bottlenecks, manual processes and wasted time
Businesses and employees tend to view submitting expenses as an unwanted, but necessary, task at the end of every month. The manual data input and repetitive tasks involved with logging business expenses via spreadsheets often make employees procrastinate (we’ve all been there) and wait right up until the deadline to submit their expense reports.
If spenders miss submission deadlines, it delays reimbursement which leads to unhappy campers (a.k.a., your employees).
Submitting expense reports at the very end of the month creates bottlenecks in the finance team’s workflow. While this may seem like a problem with little impact for a small business, it’s not. Consider the impact of hundreds of business expenses reports submitted at the same time as your company scales. Consider the finance team’s other core responsibilities that often fall at the end of the month: payroll, end of month accounts, etc. Delays in accounting can, and do, impact other areas of your company.
Spreadsheets provide great business insight in many areas, they weren’t built to handle multi-level business processes, including expense management. Manual expensing using spreadsheets poses significant risks to your business.
By utilizing Divvy Live Reporting to track employee spend, you create a more efficient process for all parties involved. Eliminating bottlenecks and creating an efficient process for key tasks reduces the margin for error in addition to keeping employees focused on core responsibilities.
Divvy’s free spend management platform submits expense reports as your company spends. Employees submit for approval before spending via smartphone. After purchase, Divvy provides employees with IRS compliant receipts, with no need to save the paper version. Company-wide spend updates directly onto your Divvy dashboard, providing you with instant insights. This greatly reduces the time and resources required to manage employee spending and diminishes the risks of mistakes associated with manual process as well as the risk of fraud.
Divvy is the first free and fully automated spend management platform. Get a free demo to learn more.