This post is a guest post by our partner Equisys.
Business expenses for travel and entertainment (T&E) are a necessary and potentially very costly component of most business operations. Expense management presents major challenges for businesses, particularly SMBs where budget spending must be very tightly constrained. In fact, it’s widely recognised that strong, efficient cost management can be a source of competitive advantage. In this blog post, we look at the top 5 challenges of expense management and how they can be addressed.
Too many troublesome processes
When travelling employees incur business expenses as part of their job, the employee, manager and finance department all want an expense process that is easy, quick and efficient to manage. For those using manual expense systems, the capturing, recording and claiming of T&E expenses can be a cumbersome and awkward process. Retaining receipts, remembering what the expense policy covers, filling in expense claims, remembering what every transaction was for, not going over the daily limit—all these issues create a challenge for the business traveller.
Any business traveller who has lost business receipts knows what a headache it can be. You end up wasting time looking for them, forget what the expense was and end up misreporting it. On top of that, you know you’re going to be challenged by your manager or the finance department and asked to justify the expense claim. If you’re a repeat offender, you may get a warning about disciplinary action. Lost expense receipts may also lead to inaccurate cost reporting, eventual mistrust of the traveller and a potentially negative impact on business efficiency and morale.
Expense policy management and enforcement
Maverick or un-policed expense management is a perennial problem for many businesses. Employees either don’t know or cannot remember what the company travel expense policy is, what types of expenses are or are not permitted, what the daily limits are or indeed whether they have exceeded the set limit. At the same time, some travel expense policies are so complex and difficult to comprehend that they become at best confusing and at worst counter-productive. If the business has preferred supplier agreements or discounts with airlines or hotels, this may not be known about by all staff.
Insufficient reporting visibility
Reporting and insights are critically important for understanding how the expense budget is being spent and accounted for. Yet with conventional expense management, such transparency is simply not available. Without a granular and detailed reporting system, it is difficult to understand which expense categories are accounting for the highest proportion of costs, which staff and departments are incurring expenses costs and to what extent, and which expenses should be reined back in times of tight finances. What’s more, with manual expense systems it’s impossible for authorised staff such as the finance team and line managers to monitor expenses and track them in real time in order to put the brakes on or monitor travelling employees.
People are late with things. It’s a fact of life. Especially when the processes they have to follow are awkward and time-consuming. Any excuse to put them off. But when receipts that were meant to be submitted months ago suddenly surface, it’s a hassle the finance department can do without, especially if it’s after the year-end, or it should have been billed back to a client or project. Late expense submission then leads to delays in employee reimbursement, so everyone’s out of pocket. Delays are a hassle all round.
These challenges can be overcome by using a cloud-based expense management system that integrates with your accounting software. Such software allows the travelling employee to take a picture of a receipt and automatically submit it on the go, as the expense is incurred. This eradicates the risk of lost receipts, reduces delays and eliminates the need for paper receipts to be clipped to paper expense sheets.
Some expense management systems enable administrators to set expense policies centrally and enforce rules to avoid the sorts of issues mentioned above. Some also enable detailed drill-down reports across a broad range of metrics for real-time analysis. Expense management software ultimately makes life easier for everyone involved in the process.
Zetadocs Expenses is one such solution that solves these challenges and more. It integrates seamlessly with Microsoft Dynamics NAV and offers simple capture, submission, approval and reimbursement of expenses. Get in touch today to find out more.