The potential of your finance team & employees can be better realized if you leverage financial automation where the mundane, yet often most time-consuming processes can be handled by technology.
Problems can arise at all stages of processing and dealing with expense reports while being a time-consuming task that can delay employee reimbursement and increase how much money your company spends on expense reports.
There is a wide spectrum of disadvantages that a business can face by not automating the process of managing Business Expenses:
1. Loss of Time + Money
“3000 hours, equivalent to 125 days or 4 months, are wasted by companies in manual generation of expense reports and correcting them” – Global Business Travel Association (GBTA)
Even when expenses are reported promptly, it takes time to review the requests for policy violations, correct any errors, and finally approve the request. But with an automated system, most claims move through quickly without requiring manual data entry or approval. That makes things easier for employees submitting reports as well as employees processing reports.
Cost of processing expense reports reduces by around 85 % per transaction with financial automation systems like an advanced Expense Management Systems.
2. Risk of Frauds + Manual Errors
Expense fraud costs Indian Businesses nearly INR 2,000 Crores & US Business nearly $2.8 Billion every year and much of this can be avoided by reducing the potential for false, duplicated or inflated expense items to be submitted for approval.
Finly’s Policy Engine can monitor & avoid submission of expenses that aren’t eligible for reimbursement (such as passing off dinner with a spouse as one with a prospect) and can also identify if a receipt has previously been submitted.
“53% on a web-based system, automatically review and flag out-of-policy expenses” – 2016 Expense Management Trends
Integrating financial automation systems like expense management solution with a corporate card program can further strengthen a company’s hand in the fight against fraud.
3. Lack of Actionable Spend Insights
Possibly the greatest financial contribution than an financial automation system like expense management solution can have on the bottom line is the ability to analyze many thousands or even millions of expense data points, to spot trends and identify areas of wasteful or inefficient spend. Expense systems’ analytics capabilities provide near-real-time insight into expenses from flight and hotel transactions to travelers’ out-of-pocket purchases and can present this data in clear visual dashboards, which allow finance teams and business analysts to make more informed decisions on their organizations’ spend.
4. Lack of policy Compliance & enforcement
While some areas of travel policy (such as the cost of a lunch) are easy to track and enforce, there are many others, such as travel day per diems or class-of-flight restrictions, which can be challenging and time-consuming to verify when entered onto a spreadsheet. Company-specific regulations, such as booking flights less than 14 days in advance, can also prove tough to enforce, and often may be overlooked by stressed administrative staff.
“Compliance with company policy increases by more than 31% with the implementation of automated expense management”
– Aberdeen Group Study
Financial automation systems can increase compliance within the business and avoid fraudlent transactions.
4. Delayed updation of existing Business Systems
Dealing with spreadsheets, late submission of paper receipts and lengthy approval processes which hinders on time updation of business systems like accounting system or a CRM which would be used to analyze expenses incurred for a client.
“42% of the firms are unable to import data from disparate sources like external systems, at all” – The Power of Real-Time Insight by Forrester, May 2014
With financial automation systems like an advanced payment enabled expense management system simplified this process with seamless integration with existing business systems resulting in a more data-driven approach to guide business strategy.
Of course, these are more reasons why and how companies can benefit from implementing financial automation tools – expense management system to automate their Record to Report Process. Nearly any business traveler or business development executive will agree that submitting post-trip expenses with receipts and spreadsheets is one of their most hated and daunting tasks.
Employee satisfaction leads to better productivity, therefore, making the case for automating the process of managing business expenses & spend all the more straightforward.