In a company, there are many critical processes that undergo to maintain its successful running and longevity. But which one is the most important and can’t be overlooked? Well, there are many but one important one is the process of expense management.
Yes, managing expenses for the company, if it wants to be successful, is very important. It includes tracking cash flows, optimizing company budgets, and even looking into compliance with tax regulations.
Expense management can be done manually and in an advanced way, which might involve automation. Manual management takes labor and a lot of time. However, technology-driven expense management is the real deal and might be the hidden key for companies who want to stay in an ever-thriving mode.
But how exactly does expense management automation work? And, if it does work, will it do any good to the companies? These questions are worthy of attention and that’s why we will answer them starting off with understanding manual expense management first.
Why is Manual Expense Management Not Effective?
1. First, It’s Time Consuming
The biggest factor here is time. If done manually, expense management will take weeks to process and complete. Suppose, you file the documents of business expenses, to get them approved, the entire cycle of the approval process will come into play.
Imagine if the process faces a roadblock at any point in the cycle, the time consumption will increase and might require to kick-start it again with annoying reminders and meetings that might not be required at first.
2. Manual Handling of Expenses in Tough
Being clumsy, the manual expense management process is not an easy ball game. Finance teams might have to spend a lot of time sorting out paper-based receipts only to get buried under a massive heap of documents.
And what if there’s a vital expense slip missing? It would prove to be really hard to find it, making the entire process for the employees challenging and overwhelming.
3. It Costs More
Manual handling of expenses means more paper, more labor, and more physical resources, which means more spending of money during the entire process. Manual expense management itself becomes an expense headache.
On top of it, how would you even store all the documents and papers? A storage facility would be required for that, which will again increase the cost.
4. Frauds Can’t Be Detected Easily in Manual Expense Handling
Fraud and financing – a story that goes way back. Whenever there’s financing involved, frauds come running into the mix. Manual expense handling does not allow fraud detection as things are executed manually, no wonder which employee might change the figures and do their thing.
In manual handling of expenses, everything is done by human hands, be it tallying of data, cross-referencing with travel data, etc. There are so many loopholes available for potential fraud.
5. Policy Compliance Becomes Difficult
Humans make mistakes, and in this case, ignorance is what costs. While filing expenses, the employees often overlook expense policies and file the final expense reports as they deem fit. As a result, it all leads to violations of expense policies.
But there’s no solution to it anyway. Validating every expense report in compliance with expense policies will make things harder as it will take more time and demand more employees who are expert at doing it.
6. Data Analyzation is Difficult in Manual Expense Management
Expense data is usually the indicator of unwarranted expenses and helps in managing company budgets. However, if the entire expense management is manual, data analysis won’t be easy because of the paper-based storage of facts and figures.
Who going to run their eyes through each and every page of expense data reports? It will consume time and require more people to work in that direction alone. And the spending patterns would also become hard to identify, which will make things more complicated.
7. Chances of Error are Higher in Manual Processes
No doubt errors will come up. Humans make mistakes, and we can’t deny that. And, there’s no one to blame for it because the process of manually handling the expenses itself is so tedious that one can note down on paper what was never supposed to be.
And, to verify whether the data is error-free is even more difficult. Time and money will go into doing that with no guarantee of success in sight.
What is Expense Management Automation?
The term “expense management automation” refers to the practice of using dedicated software to streamline the approval, reimbursement, and payment phases of the expense management process.
During this process, centralizing all the expense-related data and automating processes is done using an automated system that manages expenses and can solve the problems that arise using manual methods.
What’s the Process of Automating Expense Management?
When it comes to managing and reporting on business expenditures, nothing beats the ease and efficiency afforded by automated expense reporting systems. Automated expense management solutions use technology to streamline business expenses, eliminating the need for manual processes and paper-based receipts.
How Exactly Does an Automated Expense Management Software Work?
Automated expense management systems work way better as compared to manual workflows. Finance auditing and creating reports related to expenses, reimbursements, etc., are just the tip of the iceberg. There’s a lot more into them, but we will just look into their basic working, which might involve:
1. Filing of Expenses
There’s an interactive UI on offer to automate expenses using these kinds of software. Employees are the ones who will benefit from it and ultimately get hooked in using it. Filing of costs can be done in a matter of minutes; all that employees have to do is category selection from the drop-down menu, receipt, and sending for final approvals.
2. The Approval Process
This process starts as soon as the employee sends their receipts. The person in charge of approving gets the notifications of new uploads via SMS or email. Within the same software interface, the approver can cross-check all the particulars, in detail or even briefly (as systems are automated, they will catch errors on their own), and, therefore, approve. If there are errors in the reports or receipts, the system catches them and notifies the approver about it.
3. The Reimbursement Part
The final part of the process is reimbursement, which involves the approver sending the finance reports or receipts approving them and sending them to the higher-ups in the finance team. The members of the finance team do some final validation on the expenses using the same software, and ultimately the employees are reimbursed.
What Benefits Can You Reap with Expense Management Automation System?
The benefits of it are endless, but some of them are as follows:
1. It Makes the Entire Process Cost Efficient
You have been spending so much on that outdated and entirely of hassle manual expense handling process. However, when things get automated, the money-saving factor is what comes first. And, not just money, it will save effort and time and also take things to a better level in terms of accuracy.
The right software will automate things quickly and all that after just a straightforward implementation of it. Some software also comes with phone support, which will make things easier. All the employees who were busy before handling the expenses would now be free to work on other roles that might be more critical.
What’s more intriguing is that an expense reporting tool can be synced with bank credit cards, which allows importing of spending data automatically into the system. From there on, you can create and store data in one place, thus making the report-generating process much more straightforward.
2. Spending Patterns Can Be Identified with Automation
It’s not all about accounting or budgeting but also tracking the flow of money and spending patterns. Automated systems provide information on expenses in a centralized manner, making things simpler on various levels. More and more employees come in to adopt the approach as it is easy to get along with, and that’s precisely when spending patterns are noted.
There are so many factors involved in a company, like negotiation of business deals with clients, buying of raw materials, etc., all of which contribute to the spending patterns of a company. At an employee level, expenses such as transportation, food, merchandizes, etc. pop, which must be noted.
And, that’s what automated systems do. How much money went into business deals, how much was used for transporting the employees, what was spent on food than last year, etc., are some of the insights that automation-based expense management records. Based on them, companies can refine their expense policies and stay far away from any type of fraud or compliance breaches.
3. Compliance is Always Part of These Systems
Being non-compliant with local regulations is never the agenda of the businesses, given it always results in heavy reputational damages and monetary fines. However, how can compliance policies be brought into the expense management workflow of a company? It’s a challenge that can become even bigger if things are done manually.
However, compliance management becomes as easy as running a knife through when things are automated. These systems can apply complex rules and regulations while creating expense reports or filing finance audits.
4. It Allows Scaling of the Expense Process
Ever-thriving business never rest. They look to rush, buy more ventures, merge, acquire, or expand and grow into new territories. Doing these demands cutting off legacy systems, bringing in more employees, investing in new infrastructure, and implementing new technologies.
And, when all this high level of scaling occurs, tools like expense management software must be at their best to handle things without any hindrance. That’s what they are. Scalability is like a ball game for them. No matter how many employees you bring in or how many regulations you place, they can scale themselves limitlessly.
5. The Business Travelling Thing Becomes Easy
Imagine, as an employee, you are on a business trip, and suddenly the higher-ups want you to submit your expense reports. It might cause some unnecessary urgency and even ruin the entire trip. However, with expense management tools at disposal, the process can be automated.
As most of these systems now come in mobile versions, you can submit expense reports from anywhere in the world. And your manager can approve the expense claims even if they are a vacation, too.
The thing is that these automated systems are meant to make the entire process of expense handling minimal. These systems never take holidays and are up 24/7, so they don’t have to.
How to Choose the Best Expense Management Software?
The best expense management software is the key to creating an optimum system that automates the expense processes of a company. Therefore, focus on selecting the right software first.
But what parameters should you look for in the best expense management software? Features like auto-scanning of receipts, automated audit of expenses, fraud detection, etc. are the ones to look for, and based on them, you have to decide whether the software is good or bad.
When selected, the software will streamline the entire expense management process with its capabilities of processing and filing reports automatically, thus improving accuracy and enhancing efficiency.
If you are still looking for the right software, then meet ITILITE, the best expense management software that automates the entire expense handling process of the company like no other. Be it approval workflows, reimbursements, audit filings, etc., just sit back and relax because ITILITE is the one that will get the job done. The benefits of using it are many, ultimately proving to be the deciding factor in your company’s financial success.