As every aspect of our lives becomes digitized, the opportunities to improve efficiency and accuracy in business are reaching levels well beyond what was previously possible. Technology offers solutions to age-old business problems which can be a godsend and high among these pain-points, for accounting and finance teams, is expense management. So we will let you know in the following article how to digitize your expense management.
How does your business currently manage expense reporting? Even when Accounts, HR or Operations teams adopt reporting and management software of some kind, most businesses continue to follow the same problematic process.
Perhaps this looks familiar to you:
- After payment for a product or service, expenses are manually recorded by an employee based on paper copies which is time-consuming and error-prone.
- Paper and/or scanned copies are kept on file as proof of the expense.
- When the approval process includes a large volume of individual approvals, each with multiple stages, there can be reimbursements which contravene company policy.
- With such a large volume of approvals, a cumbersome process results in delays for reimbursement. This leads to employee discontent and cash-flow problems.
- Once reimbursement has been made, the amount must be entered into the accounts. This means manual, double data-entry, which also doubles the chance of more errors.
- Finally, a copy of approvals is kept with the original expense receipts. When these are physical copies only, this means significant storage costs and effort.
- Future requests for proof of the expense result in a time-consuming and often fruitless exercise.
Rings a bell? In 2019, shouldn’t our businesses be able to do better than this? According to a survey conducted in 2015*, the two things that annoyed workers about expenses most were saving and supplying all their receipts (34%) and that they spent so much time, every time, to record them (31%). Even when using high-end accounting, banking or expenses software there are gaps in the process, so only an end-to-end solution truly saves you time and money; from the moment of purchase to the digital capture of manual payments, through the approval process, data integration and reporting, your goal should be a system which handles each step seamlessly.
Any solution you choose to digitize your expense management should be:
- Easily accessible to employees
- Able to scan and digitize a variety of receipts
- Integrate seamlessly with other tools
Keeping these points in mind when you consider your options will allow you to choose something with high uptake within your organisation. If the effort required by the expense claimant is minimal, and the process works seamlessly, staff will not only follow policy and procedure more diligently, they will become advocates within your company.
Let’s examine what is required to manage expenses quickly and easily, without errors, while complying with company policy and the necessary regulations… and let’s do it in just four steps!
STEP 1: Digitization
The key to the success of the entire process lies in the digitization of anything and everything possible. Without a simple, effective digitization process, how expenses are managed within your business will hardly change. Relying on paper copies leads to many of the errors and delays described above, so it is imperative you find something able to recognise a multitude of formats and data points.
There are basically three types of expenses – online, printed and hand-written – and you should work with a technology that handles each flawlessly. That means online receipts which are downloaded or emailed can be added with little to no manual effort and payments made online are immediately integrated via a simple interface. Printed receipts are read by intelligent technology such as Optical Character Recognition (OCR) directly from the camera on your mobile device, while the minimal number of handwritten receipts can still be added manually and as quickly and painlessly as possible.
STEP 2: Integration
The package you choose for managing expenses must work with your existing systems, no matter which Enterprise Resource Planning (ERP), Human Resource Information System (HRIS) or accounting package you use. Whether Sage, Microsoft Dynamics, Oracle, SAP or a variety of new players, any expense management solution must not encumber your legacy systems.
STEP 3: Automation
Your digitization process should allow all the processes which follow to be completely modifiable for automation where possible. You should have the ability to set rules particular to your business and your approval process based on expense type, amount or dates and a multitude of other requirements and it should all be possible in-app, on desktop or mobile.
With 75% of business expenses incurred whilst on-the-go, the ability to make modifications according to your needs for additional approval or immediate reimbursement is invaluable. A solution which allows for currency conversion, to immediately make the approval back in native currency at the time the expense was incurred is also desirable. The goal for users, whether admins, managers or field staff should be a fast, simple and effective process.
STEP 4: Compliance
No matter where you are located, financial regulations are abundant and, despite similarities and cross-border agreements, a great variety of nuance exists in taxation law and therefore the impact on expense management and reimbursement policy is enormous from country-to-country. Even for multinationals and large cross-border teams, compliance with financial regulations in each country that your business operates can be a huge problem. Add to this the variety of privacy laws, language, data-protection and account storage requirements… and the minefield of complexity can become unmanageable. You should work with a product which starts by integrating local regulations and compliance at the point of capture, while also providing the flexibility to modify.
Compliance for storage and security have always been of high importance for financial data, but recent developments, primarily the advent of the General Data Privacy Regulation (GDPR) in Europe, mean that how data is stored is no longer purely a cybersecurity issue, but also relates to the ability of an individual to be identified, forgotten or deleted.
All of which means that when considering an expense management solution in the digital age, you should not only consider features, functionality and technology.
So, there you have it. Filtering any solution through these four steps will not only allow you to improve your current processes beyond recognition, but also remove up to 80% of the time you currently spend on such management, improve internal adoption and compliance with company policy, and provided you choose your partner well, future-proof your expense management process.
Don’t to hesitate to try Expensya for free for 30 days to discover a new way to manage expense reports!