Every business must track its operational costs, which include expense management. Employees submit expense reports in order to be reimbursed for out-of-pocket expenses. These financial components ensure that the company can claim the appropriate deductions at the end of the fiscal year. This article will discuss the critical benefits of expense management software and why businesses should use it.
Introduction
Every business must keep track of its operational costs, which include managing expenses. Employees submit expense reports in order to be reimbursed for out-of-pocket expenses. Managers verify the validity of such slips and give final approval. They must also keep track of other financial components such as:
- How much does the company spend on travel expenses?
- Expenses incurred as a result of providing free meals to employees.
- Spending money on employee gifts.
- These financial components ensure that the company can claim the appropriate deductions at the end of the fiscal year.
Although large corporations have already changed their business practices by implementing expense management software, small businesses continue to rely on inefficient accounting processes such as receipts, spreadsheets, and paper reports. It has a number of drawbacks, including:
- Duplicate reports result in decreased cash flow.
- Accounting and financial errors are subject to severe government penalties.
- The user is frustrated by difficult accounting practices and redundancies.
This article will discuss the critical benefits of expense management software and why businesses should use it.
1. Increases speed while decreasing costs.
Without expense management software, managers must either approve or request that employees make appropriate changes to the following documents:
- Copies on paper
- Reports
- Receipts
However, this method of working frequently wastes time and can result in numerous human errors. Expense management software, on the other hand, automates data collection and timely delivery to the appropriate manager. The employee only needs to click the’send’ button to start the process. This procedure is beneficial in two ways. Because physical paper is eliminated, processing costs are reduced. It reduces processing time because managers do not have to manually reconcile data.
2. Allows for faster reimbursement
As previously stated, employees encounter technical difficulties when entering expense reimbursement details and corresponding documentation. Similarly, managers can review and approve claims more quickly. After approval, the reimbursement is initiated and submitted to payroll. This procedure eliminates the possibility of errors, which boosts employee satisfaction.
3. It improves operational efficiency
To improve cash flow, businesses should bill expenses directly to employees and clients’ reports. Expense management software is integrated with accounting and enterprise resource planning (ERP), time tracking, and project management software, making it simple for employees to submit claims and managers to review and approve them. Furthermore, when the process is automated, employees do not have to waste time on mundane tasks. Instead, they can devote their time to strategic tasks that require creativity and intelligence while also adding value to the organization. Thus, expense management software is critical for all businesses, particularly SMEs, because efficiency is critical to their growth.
4. Allows for proper policy enforcement.
The rules, regulations, and norms of the government are subject to change. Most business employees — both frontline workers and managers — are not well informed about changing government policies. It can result in significant losses or strict government policies. For example, the salesperson requests a daily travel allowance of Rs.100, despite the fact that the government has capped the maximum limit for conveyance allowance at Rs.80 through the passage of a new law. In such a case, both the employee and the company may face serious consequences. The expense management software regularly updates government policies to eliminate inaccurate reports.
5. Expense management software increases transparency.
The expense management software consolidates the employees’ expense data into a single, visually appealing dashboard. It displays data in the form of charts and graphs, making it simple for managers to review and approve. The dashboard stores data such as:
- The manager’s time spent reviewing and approving claims.
- Employee expenses borne by the company
6. Expense management software aids in the prevention of fraud.
Businesses are frequently subjected to a variety of fraudulent expense reports, including:
- Misclassified expenses
- Claims that are false
- Excessive expense claims
- Several claims
According to reports, the number of fraudulent claims is rapidly increasing. According to the Association of Certified Fraud Examiners, 13% of large corporations and 20% of small businesses have experienced fraudulent expense reimbursements. Managers may fail to detect fraudulent entries from trusted employees and vendors, driving up costs to new heights.
Conclusion
Expense management software enables businesses to better manage their expenses. It eliminates technical difficulties and allows employees to submit claims more easily. On the other hand, it enables managers to review and verify claims as soon as possible. Furthermore, it enables businesses to comply with government policies, avoiding the imposition of penalties. Furthermore, it protects businesses from fraudulent activities and allows them to save money.