Is Expense Tracking and Reporting a Drain on Your Business?
Expense management and related recording are often referred to as pre-accounting. This is a term used to define the system through which financial data is gathered, coded, aggregated and normalized so that accounting can occur. Accounting processes have seen vast improvements in efficiency with the adoption of cloud-based ecosystems, but pre-accounting tasks such as expense management have mostly remained unchanged and continue to be inefficient, unscalable and time-consuming.
Using a cloud-based ecosystem like QuickBooks Online or Sage Intacct is the first step to creating efficiencies, and is generally followed by improving ancillary processes that don’t traditionally fall under the umbrella of accounting, such as collecting receipts, tracking mileage and other employee-driven tasks.
Before trying to improve these processes, businesses must understand why they may be failing. There are three key reasons why inefficiencies tend to sprout up:
1. Manual Processes Are Still Being Used
Manual expense tracking and reporting is one of the most inefficient pre-accounting functions. Automation can save countless hours of your employees’ time from the point when the expense occurs through the internal accounting function that records and ultimately reimburses the expense. There are several ways to identify inefficiencies:
- Time spent on manual data entry is excessive and takes away from revenue-generating time.
- Information is being received sporadically through a number of different mediums (e.g., on a crumpled piece of paper, in a box or through email), if it’s received at all.
- Employees complain about the process and the time it takes to follow it.
2. Lack of Urgency and Accountability
The lack of urgency and accountability employees have in submitting their expense reports tends to be a huge burden for the administrative or internal accounting staff at month end. When you don’t have specific processes that set expectations, it can lead to confusion for everyone. This makes the reconciliation process a big chore that gets pushed off for as long as possible, creating a self-perpetuating cycle.
3. Lack of Incentives
Lack of incentives for getting paperwork done and submitted with old-school expense reporting also plays a role in creating inefficiencies. The amount of time an employee waits to get their money back doesn’t incentivize them and is a lose-lose situation for everyone involved.
How to Make Expense Reporting Easier and More Efficient
All three of these factors result in a difficult and time-consuming process that everyone dreads. Wouldn’t it be great if you could automate the process, make it more enjoyable and efficient, provide a better return on investment (ROI) and spread the work evenly throughout the month?
Implementing applications like Expensify or SAP Concur to automate workflows can result in significant increases to your ROI. Some businesses have found that using these types of applications can result in a 50% decrease in the average processing time of creating and approving an expense report, as well as a 50% increase in productivity gains with the automation features. These numbers prove how important it is for a business to proactively get a hold of their processes sooner than later by transforming their workflow blockers to workflow enablers.
The above-mentioned applications can also provide next-level benefits such as analyzing transactions to make sure your employees are getting the best deals on hotel and airfare costs. Recent enhancements to these systems have even employed artificial intelligence to allow employees to simply take a picture of their expenses with their smart devices and then upload them into the system, which will then automatically code the expense based on when and where the expense was incurred.
Thanks to the cloud-based ecosystem, the benefits of a few simple process adjustments make a world of difference for everyone involved. With applications like Expensify and SAP Concur, expense management can be brought into a carefully constructed ecosystem for a more automated, seamless experience. Now that you have the tools, it’s time to get started on improving your process!