Expense Management Tools for Smoother Processes
Published: 01/05/2023
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Many companies find it difficult to establish a clear and efficient process for claiming expenses. In this article, we will explain how expense management tools can assist you in this area. We will guide you through key challenges and how to address them with the right software.
Sometimes, your employees will need to cover business-related expenses out of their own pockets. This is mainly when a purchase must be made immediately, without time to go through the process of obtaining approval and signatures. For example, when they run out of the materials needed to perform their duties. Other times, the expenses are less tangible but still related to their ability to work: travel, accommodation, client entertainment, and many others. Naturally, as a business, you are expected to reimburse them.
It sounds logical and simple, doesn’t it? But don’t be too quick to assume that. If you’ve ever handled employee expenses, you already know most of the potential problems that can occur. From late submissions that disrupt your pay cycles to suspiciously expensive travel costs you can’t dispute—many issues can happen and end up costing your company a lot. That’s why we recommend you start using expense management tools. They are designed to ease most of the friction points.
A good expense management tool varies for each business. Here’s how to decide if the solution suits you.
It integrates with your existing stack;
It enhances your processes instead of replacing them;
It brings new data you’ve previously had no access to;
It minimises admin work;
It is easily accessible to everyone who will use it;
It is simple and straightforward.
The features you need vary greatly depending on several criteria, and only you can define them. Moving forward, we will discuss the general uses of expense management tools, those that are central to their core functions.
There are many reasons to try expense management tools, such as reporting, process automation, improved visibility, and more. But let’s start with the basics. Although the idea of getting reimbursed for work-related expenses is simple, there are still many challenges. Let’s discuss them.
One of the most common expenses is travelling. While it can be quite simple when submitting receipts for train tickets or parking spaces… it’s not always this easy. First, most transport links have switched to contactless payments on the spot even before the pandemic. The latter encouraged more operators to adopt this approach. In this case, there is no invoice or receipt to be submitted.
Driving presents a different set of challenges. Although an employee can claim expenses for petrol, it is often unclear how much was spent specifically on travelling between locations. While this doesn’t mean we encourage suspecting your staff of foul play, and most miscalculations occur by mistake, it can quickly drain your budget. In other words, some travel expenses that are easily reimbursed and leave a paper trail are straightforward, but others remain vague and practically untrackable. The good news is that this issue can be easily addressed with certain software solutions.
It might surprise you, but businesses lose billions each year due to mismanagement of expenses. Although simple in theory, it’s not as easy in practice. Many companies don’t even have a process in place, and those that do rarely prioritise its optimisation. That’s a costly mistake we aim to help you avoid. The first step in that direction is recognising that the key to a good process is clarity.
First, it must be outlined what constitutes a refundable expense and what does not. Then, you need to establish a step-by-step process that everyone must follow. These will vary depending on your company’s policies and structure, but here’s an example.
Step one: The employee submits an expense, accompanied by a receipt confirming its validity. It’s advisable to establish a deadline indicating when the expense must be submitted for reimbursement.
Step two: The approver examines the submission and delivers the verdict.
Step three: If approved, the receipts are entered into accounting software to reimburse the worker and facilitate future audits.
Step four: The worker is reimbursed either as part of their wages or, if agreed upon, as a separate payment.
If the expense is rejected, the worker should be given an explanation of why, along with clarification of the criteria.
While expense management tools address the core issues typically found in reimbursement processes, their functionality is not limited to problem-solving alone. They can also improve specific procedures that, although are individual processes, all connect to expense management as a whole.
While the ability to upload a batch of receipts at once may seem mainly advantageous for the person submitting them, there is a benefit for you too. Firstly, you won’t need to approve each receipt individually, although we will elaborate on the approval process in the next section. Secondly, the uploaded receipts will automatically be stored in a centralised system, making them easily accessible all in one place.
Employees often delay expense submissions, which can impact your accounts over the long term. Moreover, if expenses are submitted after the deadline, there will naturally be delays in processing payments, causing frustration and distrust among staff. This issue frequently stems from the fact that uploading receipts, especially a large batch, can be tedious and time-consuming. While the process is designed to help employees reclaim their expenses, it’s understandable why they might not see it as a priority compared to other tasks. Being able to upload everything quickly and in one go should make it less burdensome for them. For you, it means fewer discrepancies. Everyone benefits!
Approval of expenses is the final step of the process, so it should be handled with the utmost attention. However, it can also be delayed, and it’s human nature to become less focused the longer we work on a repetitive task. For example, if you are manually approving large volumes of expenses shown in a spreadsheet, you are more likely to overlook errors. This results in the approval of incorrect amounts, non-reimbursable tasks, and receipts unrelated to the submitted expense. In other words, you will be paying for your mistakes. Literally.
Another subtlety is that you might need to log into the system each time a new expense is submitted to review and approve it. While it’s not a large task, you probably have more urgent priorities and may want to delay it. Sadly, this is how things often get forgotten. We thought long and hard about the solution for this problem at Timesheet Portal, before developing an approach that is simple yet, as our users say, very convenient. When you receive an email notification of a new expense report, you can review it and decide right then and there. That’s correct - directly from your inbox.
If you thought we have now covered all that expense software can offer - think again. While we covered some of the core functionality a good solution should possess, very often tools have more in store to offer. These additional features vary depending on the vendor and their target market, but one thing is common across all SaaS solutions.
No process should be set up and then left unattended. Whether it's expenses tracking, attendance monitoring, or any other task, all of these collect data. Such data provides a strong foundation for optimising and improving processes in the future. Expense management tools do more than just record metrics; they also come with features that allow you to easily explore data with a range of filters.
This enables you to see a broader perspective, comparing changes over time and identifying emerging patterns. You can then focus on specific data segments, their origins, and how they shift, as well as their impact on your overall results. Moreover, this information is not limited to the platform itself. In most cases, it can be exported as a standalone report, which is useful when sharing information with parties that use the software. It is also very practical for both internal and external audits. Not only can you investigate quickly, but you can also generate any relevant paper trail within minutes.
Expense management tools aim to reduce the time spent navigating complexities related to employee expenditure. Although simple in concept, expense reimbursements can be a grey area that lacks clarity. Unfortunately, this lack of structure can result in significant financial losses.
The designated software helps bridge these gaps by directly addressing problem areas at every stage of the process. It also adds convenience and reduces work required by any involved party, whether the submitter or the approver. A good solution won’t aim to scrap and replace your current operations. Instead, it will assist you in gaining better insights into your existing situation to guide you in building upon the foundation you already have. Overall, if you want your expense claim processes to be as seamless in practice as they are in theory - the right tools are essential, not optional.
Ready to explore their potential further? Schedule a demo with us.