If your business is still relying on Excel spreadsheets to process their T&E expenses (Travel & Entertainment), then you are doing expense reports management wrong. , the average cost of manually processing a single expense report had gone up to 26.60$ in 2015. Luckily, using an automated solution is becoming more and more common. The same PayStream Advisors report also indicates that the beforementioned cost falls to $6.85 per report with fully automated systems.
What exactly are these costs and how to cut them using web-based solutions? Find out all the information you need in the third article of our T&E series!
1. Loss of productivity:
Did you know that according to PayStream Advisors, 69% of businesses require employees to report their T&E expenses? In the case where this is done manually, travelers must keep the receipts, itineraries and write down any non-receipt items. Then, they have to enter the Expenses into an Excel sheet, print them, staple receipts to the spreadsheet and mail the report to their manager for approval. Managers have to make sure that each expense has a receipt and is compliant with the company travel policy. The last step in this long, non-productive funnel is to direct the report to the next manager for approval or for payment (which also includes multiple steps on its own).
Imagine the amount of time lost on these tasks that could have been spent on other more profitable tasks. This goes especially for salespeople who travel a lot and work on commission. A lot of the time spent reporting expenses is a lost selling time, which has a direct effect on the company as a whole.
2. Inaccurate reporting:
The reporting process is very flawed especially when there are several reports to be submitted and verified manually. Employees may accidentally or fraudulently submit a duplicate that will slip through the cracks and cost the company money. Oversight Systems analyzed $1 billion in T&E expenses and found that 0.75% of transactions were duplicate submissions. One approach to ensure that there are no duplicate expenses is for businesses to digitize their expense management.
3. Report fraud:
According to the Association of Certified Fraud Examiners (ACFE), businesses with less than 100 employees have a 28% higher median fraud loss than companies with more than 100 employees. Fraud can manifest in inflating expenses, changing numbers on receipts, hiding alcohol purchases under other purchases, etc. Fraud becomes easier to slip when these reports are manually processed and do not go through an intelligent software that immediately detects it. ACFE warned that even one fraudulent report can have a heavy financial toll since 5% of employees commit 82% of all expense report fraud. In addition, employees who commit T&E fraud are very likely to have committed other occupational fraud elsewhere in the organization.
Read also: When Expense Reports Rhyme with Fraud
4. Delayed visibility:
By now, you already understand how time-consuming manually reporting expenses is. One important reason is the delay in the visibility of incurred expenses. Employees can take their time reporting their expenses, managers can do the same when approving/rejecting reports, and the finance team can take even longer to verify the reports and actually issuing refunds. This results in a long reimbursement cycle, which will eventually affect employee productivity and morale.
5. Non-compliance with the T&E policy:
A T&E policy is very important to have within businesses, it encompasses all the necessary information that allows avoiding fraud and misunderstandings.
Read also | How to properly define your T&E policy?
According to an Oversight Systems 2014 report, 20% of employees have at least one non-compliant purchase. Yet, 73% of businesses manually review reports for violations, which is inefficient and makes fraud and error easy to occur. Non-compliant expenses can include missing receipts, augmented mileage, etc. These count for thousands of dollars of out-policy spending that is unnecessary if the T&E policy is enforced and communicated correctly.
As you can see, most of these hidden costs can be avoided by eliminating the manual process and migrating towards automation. An expense report management software, like Expensya, makes this process easier with less risk of fraud and human error. These solutions enable employees to create, submit, and approve expense reports via web or mobile without the need for spreadsheets. They can simply take a picture of the receipt and our unique OCR+ technology automatically detects all the important information and generates an expense report. The latter will then be submitted to the manager who sends it to the accountant after validation.
This process is optimized in order to make the performance of employees as efficient and maximized as possible. What are you waiting for to gain time and most importantly, save your business a lot of money?