Employee expenses and reimbursements form an integral part of business expenditure. The traditional systems of tracking and reimbursement of expenses are heavily reliant on paperwork These methods are time intensive and rely on manual work to ensure accuracy. Such systems greatly affect the productivity of employees as a lot of time is spent on low-value tasks. Manual reporting will be prone to errors and pose a risk of non-compliance.
Legacy systems often pose a challenge to gain visibility into corporate spending, which have often been cited as a cause for reduced productivity and lack of insights for analysis and actionable insights.
Over the years, companies have been transitioning into digitized and automated methods for expense management. The travel and expense (T&E) software market is on the steady rise as more businesses are moving from paper-based expense reporting to software solutions. IDC expects the worldwide T&E management software market to reach $3.1 billion by 2023 with a CAGR of 9.5%.
One of the key positive impacts of automated T&E management is improved workforce productivity. These systems help employees to prioritize work, keep track of schedules, and optimize filing and auditing processes. Digital expense management systems also provide real-time access to historic expense data and are capable of generating insights by leveraging them.
Following sections will glean into some of the common problems in expense management and how digitizing expense management can be beneficial.
Why Expense Management Is A Universal Problem
It is still a prevalent practice for employees to attach bills for reimbursements and approvals to be manually routed through emails. Organisations still manually enter bills and vet them in accordance with the policies to determine compliance.
Manually driven processes seldom provide visibility on budgetary lapses & fraud expenses. Additionally, processing manual expense reports incurs heavy costs. Following are some of the other ramifications of legacy expense management practices:
- Time intensive processes with several hours spent on unproductive data entry
- Lack of control over business travel & expense spending
- Reconciliation will be time-consuming and cumbersome
- High processing cost incurs more manpower and man hours
- Inefficient ways to monitor deviations from company policies in the expenses filed
- Erroneous data entry
For businesses managing expenses manually, automating expense management value-chain can instill efficiency and accuracy in a digitized environment.
Benefits Of Digitalisation Expense Management
Companies view T&E as a cost center, and it has often been one of the first entities to come under corporate budget cuts. Optimizing expenses and instituting efficient ways to manage expenses is imperative to businesses.
Digitalization of expense management is enabling businesses to go paperless and cashless. These systems also provide complete visibility and control over spends by means of dashboards which can enable companies to make effective decisions. Powered with analytics for policy violations, businesses can identify employees frequently violating company policies while reporting expenses.
Digital T&E management systems are equipped with Optical Character Recognition (OCR) which can greatly reduce manual interventions as details of the receipts are auto-read and uploaded. Consequently, expense entries are automatically enhanced with the transaction data (added by employees) like photos of receipts, notes and tags.
Expense data can be automatically captured from multiple sources such as credit card statements, SMSes, mail inboxes, travel apps and portals thus eliminating lengthy error-prone manual entry processes.
Automated systems allow for setting up multi-level, sophisticated approval flows and ensure all expenses are accounted for. Digital systems also offer customizable spending limits and workflows to empower teams to pay directly with transparent and predefined preferences. Expense type limits control allowable expenditure, either with warnings for approvers or by preventing an expense report from being submitted. Greater control results in reduced expenditure and saves time for approvers and the finance team.
With automated expense management solutions, reports can be submitted on a regular basis. This enables finance teams to verify expenses throughout the month and create a levelled workload. It also provides room for finance teams to react if there are discrepancies in data with access to the entire audit trail online. This allows for better auditing processes and to take relevant corrective measures in time.
Expense management solutions automate the creation, submission, approval, and processing of expense reports. Organizations must leverage these systems to reduce processing costs and gain control over T&E spend. Eliminating manual expense reporting will result in improved efficiency, cost savings, employee productivity.
With insights generated from digital systems, organisations can also control hidden costs that lie outside the expense report like internal travel, approvals and workflows, reimbursement, budgeting, reconciliation costs & audit invoicing.
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