Employees Spend Needless Time On Expenses Filling out forms, whether electronic or on paper, keeps employees from working on core job responsibilities. Even if incredibly adept and speedy at creating spreadsheets and expense reports, they still spend that time. If you add up the time spent by every employee per week on compiling and filing when using a spreadsheet or paper-based expense management process, the results can be surprising. Multiply that by time spent over the entire year, it adds up to an even bigger chunk of time, and a large amount of extraneous expense. By eliminating these wasted hours, you have the opportunity to give time back to the employee, boosting overall productivity. Automating the entire process can make your employees’ lives easier, while also giving administrators greater detail regarding the scope of how company cash gets allocated. Having happier employees who waste less time on admin translates into a more efficient and profitable business, as many of our clients have discovered.
Finance Team Spends Time Managing ReportsOnce an employee fills out a request for expense reimbursement or management, it doesn’t stop there. The Accounting team takes over, which allots a portion of their time each week to managing these requests. They ensure everything follows company procedures, reimbursement processes, includes proper documentation, and has department lead approval. Businesses with increased travel and entertainment or departmental charges may experience reimbursement lag as a result. When processing expenses using spreadsheets, handling added volume means asking your staff to dedicate more of their time to processing claims.
Typically, this includes:
- Manually reviewing and approving expense claims
- Chasing down employees who submitted claims with missing receipts, out-of-policy or questionable expenses, missing client/job/project codes, or missing meeting attendee information
- Reconciling employee-reported expenses with a company credit card statement
- Manually recording each expense claim in the general accounting system
- Creating the reimbursement payment for the employee
- Manually pulling together a report for any manager who wants to know the total spending on any project, vendor, event or category
Costs, Inefficiencies, and a Lack of TransparencyWhether you desire to cut costs or grow your business, disciplined spending plays a critical role. To stay on top of cash flow, you need to know where and how your employees allocate money, ideally as it’s spent. Spreadsheets, paper copies of receipts, late submissions of expense claims and lengthy approval processes all stand between you and a clear picture of your cash flow. When your expense management system requires manual processing, each step of the process takes time, often with time in between, and the possibility for error every step of the way. On top of that, expense fraud is often disguised as an error and caused by lack of transparency.
Costs From Out of Policy ClaimsIn our experience, employees make “out of policy” claims, often for understandable reasons, and managers tend to quickly approve them. This can happen for a multitude of reasons, most commonly human error, of which there are two types: In many cases, expense policies contain complex and/or outdated processes, which means the staff needs regular training and briefing. If not, the company runs the risk of employees submitting incorrect requests and auditors approving expenses that the policy does not cover. Alternatively, managers may also allow overly generous expenses claims as a covert way of rewarding employees. Either way, the cost of excessive claims and the cost to the admin team of checking claims against policy can turn into a substantial time waster. What’s more, management gets little information about who claims what without proper reporting. By contrast, with an automated solution, the system provides detailed information about claims that fall outside of your policy – right down to who tends to make them, and who approves them. Perhaps the policy needs updating and the department makes valid claims, or maybe the department is approving fraudulent claims. Companies can achieve substantial savings by focusing on excessive expense claims and understanding the “why” behind them. Transparency in spend minimizes the possibility for human error or fraud across the board.
Limited Spreadsheet FunctionalityAdopting an efficient Spend Management System comes down to ease of implementation, employee adoption, and limiting the possibility for error, unintentional or intentional. Using a solution designed to reduce error is often the most cost effective route. Two systematic approaches for minimizing human error:
- Exclusion: eliminates the possibility for non-compliance
- Preventative: makes non-compliance difficult, with the possibility for override
- Combine all data related to expenses in one place
- Flag out-of-policy expenses and eliminate data entry errors
- Quickly and accurately report on expense trends
- Eliminate the effort to check and consolidate expense-related data
Replace Spreadsheets With Peace Of MindEveryone has a soft place in their hearts for spreadsheets. They’re fantastic. That said, they are not ideal for tracking company expenses. Having employees do their expenses on spreadsheets can turn into a terribly inefficient process that erodes productivity and makes managing policy a challenge. Anyone involved in the process can see the wastefulness of manually handling expenses in a digital age. The inertia of a functioning office can often slow down or halt implementing process changes or updating outdated technology, but successful businesses make the time. Management and employees should focus on solving big challenges— not wrestling with administrative tasks. Take charge by ending unnecessary processes on outdated systems. Implementation can seem like a mammoth task, but here some common misconceptions might prevent the progress that your business needs to move forward.
- Expense solutions are only for big companies.
- False. The potential for eliminating excess spend can work for any company, large or small. They illuminate and prevent inefficiencies, boost productivity, and give businesses the ability to produce meaningful reports, increasing transparency in the process.
- Using spreadsheets to do expense claims is free.
- In fact, they can cost more than they save in the long run. They leave companies vulnerable to employee error, and even fraud, which can increase the cost of this so-called free medium. Limited visibility means you might not even see the errors that occur until they become a much larger problem.
- I do not need visibility into our travel and expense spending.
- On average, companies spend 10% of their budget on travel and entertainment, a huge chunk of revenue that goes back into the business. Inefficient expense management creates lost revenue, and the possibility for error, which can make -this cost grow into a cumbersome money-pit. Streamlined management can ensure that your company allocates spend exactly where it’s needed, and transparency allows for accuracy. It’s a big and controllable expense, and you will be amazed at what information adds to your ability to harness spend.
- The cost to change systems is too much.
- An automated expense solution can drastically improve efficiency in the entire process, from the initial spend to the final report. It gives visibility to all aspects of spend, eliminating waste and the possibility for fraudulent requests. Overall, proper expense management saves time, money, and hassle, while increasing productivity and profitability. It gives you the power to control and harness spend to better your business.
Skewed Perception by Employers
- Our employees would never exaggerate their expense claims.
- Many employees do, whether on purpose or accidentally, and until you have complete visibility and control over approvals and enforcing policies, you leave your company open to abuse of the system.
- Our employees receive reimbursement quickly enough.
- Truth is, you can never know what your employees’ financial situation looks like. Employees dislike slow payment. Our research shows that many employees actually increase their expenses because of the hassle that slow payment causes them.
- It doesn’t take much time for my employees to fill out expense claims.
- On average, one expense report takes 20 mins, costs $58, and 19% of them contain errors. See our article about the hidden cost of manual expense reporting here.