To keep the wheels of a business moving, a company must incur costs. The expenses are necessary for the company to expand and maintain its production and operations. The amount of money spent and the number of spenders increase as a business grows. You should be aware that not all investors spend money on the business.
Employees also have to pay personal expenses for the business to run. The company is responsible for these expenses. The employees are responsible for repaying them with the least effort and resistance. An employee must first declare their expenses to compensate for a business expense. The expense reports include the total business expenditures and the reason for the spending. The expense reports will then be verified, approved, and reimbursed.
Why Use Software For Expense Management?
Time is money in today's world. Automating tasks is a way for businesses to increase profits by saving time. The expense management industry is also in transition. Many companies have switched to automated software to improve the efficiency of reporting expenses, approvals, and reimbursements. They enjoy dynamic automation, which reduces work and error.
Why Does Expense Management Matter?
Effective expense management allows your company to comply with IRS rules, improve employee satisfaction, and increase the financial productivity of your organization.
What Is Expense Tracking Software?
Expense management software helps users manage their expenses and reports them. The finance team also uses it to handle reimbursement, expense reporting, and travel requests. Automated expense tracking software automates all aspects of expense reporting and management, reducing the risk associated with conventional expense management.
This expense software allows a company to process and receive business expense reports submitted by its employees while on the road. It also verifies that the expense reports do not violate any policies before reimbursing them. While the basic components of expense tracking are the same, removing manual processes and submissions makes a big difference for everyone.
How Does Expense Tracking Software Work?
Tracks Your Receipts
Reporting your business expenditures requires you to present receipts as proof. The software allows users to update and upload information about their spending.
- Users can submit an image instead of submitting a copy of each receipt. It is easier for employees to manage physical receipts.
- The receipts of all business transactions are stored in a dashboard that can be tracked and accessed instantly. It is useful for the approvers or verifiers, as they can view expense reports and proof of every employee in a single place without digging through an extensive collection of paper receipt invoices.
- Accounting professionals find that such an organized system is ideal for internal and external auditing. Each expense can be reimbursed, and its supporting documentation is easily traceable. It also allows for quantitative and qualitative evaluation of employee trends and spending patterns.
Enforces Travel Policies
Software for expense management automates the process of policy checking and enforcer. The software has a number of basic features with real-time visibility that ensure policy violations can be tracked and minimized.
- As soon as the expenses are created, they are checked to see if there are any policy infractions. If there is a violation, designated people are notified immediately.
- Integrates with corporate credit cards to send direct bank feeds for employers to reconcile each reported card expense. The software matches business expenditures with statements and alerts authorities in the case of mismatches.
- Softwares for expense management give employers the freedom to add and modify policies according to their needs and goals. The configurations are the criteria by which software assesses each expense report.
- The admin can determine the consequences and implications of policy violations if a reported expense does not match your T&E policies and can use this to reinforce compliance in the organization.
Streamlines Expense Report Approvals
The expense management software will scrutinize a company expense once it is entered. It will flag the expense if it is in violation of the policy and alert the approver as well as the employee.
- Approvers can verify and investigate a marked expense without looking at receipts or policy documents.
- The software also identifies and states the purpose for marking the expenditure. The expense management process in verification and approval is accelerated with real-time insights.
- Software for expense reports can also make the entire reporting process flexible, allowing it to adapt and change with changes in workflows and policies.
- It allows admins to set up workflows for approvals that specify the validation chain and process they prefer. If a policy is violated, it can be reported directly to the appropriate authorities without impacting the remainder of the workflow. It streamlines the approval and investigation of expense reports.
Expense Management Software: 9 Benefits
Automated expense management software is a great solution to many of these challenges. Automated expense management software benefits, making it a must-use automated process to improve employee satisfaction, increase productivity, reduce costs, and increase compliance. Improved reporting assists with financial analysis and planning as businesses assess their current expenditure and look for ways to improve efficiency and reduce costs.
What can companies expect from implementing expense management software?
Faster, Simpler Processes
The traditional way to submit expenses was to print paper copies and attach receipts, then send them to managers who either approved them or sent them back to employees for adjustments. The workflow has been automated with the expense management software. The report will be automatically sent to the correct person for approval once the employee clicks "submit." The reimbursement amount can then be submitted automatically to payroll after approval. The report can be forwarded to another approver if the normal manager is away.
Simplified processes result in companies being able to:
- Reduce processing costs: Eliminate tangibles like paper. The company also eliminates the cost of employees or managers dealing with paper copies, looking for receipts, and manually matching numbers. Most companies do not track the costs of processing these reports. Introducing expense management software will help them save money that they did not even realize they were losing.
- Reduce processing time: Companies can reduce the time required to process expense reports by using automated software to flag out-of-policy expenses, send approved reports to be paid, and approve reports. Accounting departments can run their accounts payable reports faster than waiting on the last paper expense report.
Employee Reimbursements Are Processed Faster
Automated expense reimbursement allows employees to submit their expense reports with the corresponding documents immediately. Managers can easily and quickly review and approve all claims when they arrive. These tools allow employees to receive their money more quickly and eliminate frustrations with mistakes and delays.
There Are Fewer Delays And Mistakes
The automation functions in the expense management software not only reduce the amount of time required to reimburse your employees but also improve the accuracy of the accounting. Employees may make mistakes when entering data into manual expense reports. These errors could be compounded by finance staff who enter the information in spreadsheets. Software for expense management can detect errors and duplicate entries and help prevent excessive payments. It will also alert managers when the amount seems to be too high.
The software can send out alerts when a payment or report is late. The solutions can pull information directly from credit card and bank statements and integrate with travel management software. App-enabled OCR allows employees to attach expense receipts to reports using mobile devices to capture them without human error. This eliminates the possibility of errors when typing on small screens.
The Efficiency Of Operations Is Increased
Employees' reports are essential if you plan to bill directly to your clients. This will maximize the cash flow. Ideal integration of expense management software with accounting, time-tracking, and ERP software would be ideal. This process can be made simple by the employee tracking the expenses and the manager approving and reporting. Your company may see an improvement in cash flow.
Because employees spend less time creating tedious, time-consuming and error-prone manual expense reports, the ratio of input to output is not impacted by the employee's focus on "input". Instead, They can focus on tasks and projects that add value to an organization. This could be going on a sales call or creating strategic budgets. Startups can greatly benefit from using expense management software.
Enforcement Of The Expense Policy
The most diligent manager might be unaware of every tax or expense policy change. Automated expense management software can flag travel costs not in line with your company's policies by enforcing rules customized to you. Employees submit expenses based on old amounts, even though federal guidelines have changed. Employees might be denied reimbursement because they are trying to claim a policy addition, such as an ergonomic keyboard.
Visibility Is Improved
The dashboard is a feature of most expense management programs. It compiles data on employee expenses and displays complete visibility in charts, graphs and other graphics with productive time. Managers can see metrics such as how much a business spends on each employee, per category, and the time taken to approve expense claims.
Fraud Prevention Is Enhanced
According to the Association of Certified Fraud Examiners survey, 13% of major organizations and 20% of businesses with fewer than 100 employees reported receiving false expenditure reimbursements. Managers and finance teams are frequently too busy to detect carefully concealed false entries by reputable contractors or employees. Money is difficult to get back after it has been spent. Any suspicious entries are cause for concern, which prompts an auditor to look into them further.
Reporting Simplified
Real-time reporting and analytics give you a real-time view of your company's employee, project, or category and can report expenses Project or category. Software for expense management allows you to combine expenses in a single report. Moreover, businesses can also implement best practices for expense management by:
- Identification of high-spending employees, policy violations and expense trends over time for each employee.
- You can suggest which hotel chains, restaurant chains and car rental companies to contact for discounts.
- Encourage employees to save money by connecting the dots between frugal living and being able to invest for growth.
The insights can also help identify specific areas in which companies need clarification or better enforcement of their spending policies.
Compliance Is Increased
Software that manages expenses helps businesses comply with state, local and federal tax authorities. They can categorize expenses by office, mileage and travel and then tag them accordingly. Some expenses like entertainment, dues for country clubs and golf, and athletic and other sports clubs are no longer tax-deductible. Including them could attract the IRS. The software can also provide electronic versions of receipts and reports, making them easily accessible if an audit is conducted.
Selecting an Expense Control System
When purchasing an expense-management solution, you should follow the same best practices as any other software project. Here are a few tips to keep in mind:
- It would be best if you started with the discovery and planning phases, including defining your system requirements based on detailed workflows for expense management. Then research and select a system. Will you choose on-premises or software-as-a-service (SaaS)?
- Look for ongoing fees, such as upgrades, support services, license renewals, etc.
- Ensure the software can be tailored to your business workflows and policy without extensive developer resources. It may be better to check if you can tweak your business processes to match the software. Remember that the software was developed for hundreds of thousands of businesses.
- Select a mobile-friendly system with intuitive functionality, a well-designed interface, and a user-friendly design that is appealing to today's multigenerational workforce.
- Provide training and technical assistance to all users.
- Do not migrate historical data into the new system. Instead, take some time to remove obsolete customer accounts and check for errors.
- Integration with project costing and accounting software.
Seven Business Expense Management Trends
Following are expense management software trends that are prevailing in the market and require a view on them to deepen our understanding of expense management.
Continued Digitalization Of Expense Management
For a very long time now, digitalization has been a necessity. However, recent years have accelerated this agenda. Digitizing business expense management has become more important as more teams work remotely. Digitalization can be seen in cloud-based solutions in data storage, online spending management, invoice and vendor management, and stringent cybersecurity.
The cloud-based software provides accounting software that helps execute business operations effectively and efficiently, along with advanced data analytics to make complicated processes easier for individual employees.
This move benefits your employees and the finance and accounting department. Automating these processes will reveal more cost-saving avenues and better financial forecasting. A single database and platform ensure the accuracy and standardization of data. The platform also benefits employees since it removes paper expense reports.
Cash Flow Solution: Payment Solutions For Efficiency
The traditional expense management systems of corporate expense management have become inefficient with the introduction of automation and digitalization with various expense categories on board.
Broken systems, financial leaks, and fragmented payment processes with low turnaround times are not conducive to hybrid work environments. Recent changes to business expense management have been impacted by the demand for a more centralized, streamlined solution. Global B2B payments are driven by a single tool for tracking business expenses.
The Topic Of B2b Payment Security Is A Must-Discuss Issue
Security is necessary for businesses that process B2B global payments or use company capital. Companies are at risk from cyber fraud and financial scams. They must invest heavily in high-security controls to ensure compliance. Businesses are searching for an expense management system to protect their funds from fraud.
Outsourcing Of Bank Connectivity
Small business owners cannot track expenses using the "solutions" offered by banks. Legacy financial systems, such as banks, are severely behind in the payment process. Businesses need payment solutions that can grow with the company's speed. Spend management software allows seamless banking integration without any major issues.
No More Spreadsheets
In 2023, corporate expense management will be about saying goodbye to old accounting software, such as spreadsheets. When they first came out, spreadsheets were the most popular. But as technology has advanced, the ease of use is no longer the same. Spreadsheets are not a good tool for communication, teamwork or collaboration.
Spreadsheets are not cost-effective or time-effective. Spreadsheets require a lot of manual data entry, which is time-consuming and costly. Accounting automation eliminates all of these issues. You can process invoices and bills and then easily export the data to your accounting software.
Account Reconciliation
Companies seek solutions that offer easy reconciliation to optimize their expense management. A simple reconciliation indicates that an organization has simplified its invoice and accounts payable management. Easy account reconciliation also provides transparency into a company's funds and allows them to be used more efficiently.
Accounting reconciliation is a way to ensure that data on every transaction are stored and sorted in an orderly manner. It also allows for mistakes to be spotted and corrected immediately. Arion ERP is a popular expense-tracking software for small businesses. It offers an integrated view of your invoices, vendor payments, accounts payable workflows, and vendors. The 3-way matching function combines all necessary documents, such as invoices and receipts, to the relevant transaction. This allows for a seamless auditing and reconciliation experience.
Accounting, Finance, and IT Aligned
The best way to describe business expense management is as a fine balance between various functions directly impacting how a firm's capital is used. Accounting, Finance, and IT departments working in isolation rather than cooperating and creating a single fund can harm your company's financial standing.
You need to ensure that these departments are in constant communication and alignment. This can be achieved by investing in an expense management system that is transparent, reliable, fast, and accessible. Your core teams will be encouraged to maximize their potential by switching to automated and innovative spend management systems from your legacy financial system.
Conclusion
In summary, expense management software is a great tool for businesses of any size. These software solutions automate tracking of employee-initiated expenses, employee business expenses, travel-related expenses, workflows for approval, and reimbursement processes. This helps businesses save time, eliminate errors, and gain better insight into their expenditure. The software also provides valuable insight into the spending habits of businesses, helping them to find areas for cost reduction or optimization.
Expense management software also helps businesses to be more environmentally-friendly and sustainable by reducing the amount of manual expense management in data input and paper processes. Implementing an expense management solution is a great way to maximize efficiency and reduce costs as businesses adapt to the rapidly evolving business environment. Get in touch with the best expense management software solution Arion ERP to get an efficient and effective expense management system to smoothen operations in your business.
