5 Steps to Reduce Expense Processing Costs
Every company wants to manage expenses. When it comes to employee expenses, it’s essential that your process makes it easy for you to record, process, and reimburse employee expenses in an efficient and cost-effective way.
How Do You Process Expenses: Manual, Spreadsheets, or Software?
- Expense management involves analyzing expenses, tracking expense trends, and measuring expenses vs. revenue for a better view of ROI.
- Keeping a closer eye on employee expenses can help prevent overspending, while making sure that employees don’t misreport their expenses.
- With integrated expense management software, you can process reimbursements faster than with a manual or paper-based system.
How do you manage employee expense?
While many companies choose expense management software to help manage employee expenses, plenty still rely on paper tracking and spreadsheets. Even if these methods work for you, they can create issues that result in misreporting, inefficiencies, and lost time—all of which can lead to extra costs.
Here’s a quick overview of three ways—paper, spreadsheets, and software—that companies manage employee expenses:
- Paper tracking
o On the plus side, paper tracking provides a paper trail in the event that employees and administrators need to circle back and review a specific expense.
o However, doing everything by paper can be time-consuming and tedious for everyone.
o Also, when employees track expenses by paper, they might lose receipts, or put off tracking expenses until later. Both issues can contribute to misreporting.
o For many companies, managing expenses via spreadsheet is a step-up from paper. It’s more organized, and can help streamline the process.
o However, spreadsheets can become inefficient. For one, integrating a spreadsheet into payroll involves extra steps. Plus, spreadsheets don’t scale easily for companies that are growing, or during travel spikes when more employees are on the road.
o What’s more, adding expenses into a spreadsheet can be cumbersome for an employee on the road, especially when they have to wait until they’re back at their hotel to fire up their laptop and enter numbers.
- Expense management software
o Expense management software can help you avoid incurring soft costs associated with manual or paper expense management.
o With expense management software, you can create built-in limits, warnings, and other features that help keep employees on track.
o Meanwhile, mobile features make it easy for employees to report expenses in the moment.
Regardless of the system you use, there are steps you can take to help manage costs. We’ve outlined five steps below.
As your organization grows, is your expense management system scaling? Expense management software such as ExpenseWire offers solutions that help you handle any size workload with greater efficiency. Request a demo and learn more.
Reduce Expense Processing Costs
However, if you haven’t reviewed your expense management process in a while, now could be a good time to do so. After all, something that seems simple can become a problem when dozens of expense reports are entering the system every month.
Take these five steps to run a health check on your expense management system—whether it’s paper, spreadsheet, or software. They can help you discover inefficiencies, catch errors, and reduce hard and soft costs.
1. Review timing and rules associated with submitting expenses and receiving reimbursements.
o What steps are involved in approving and processing reimbursements? Does an expense report go from employee to manager to accounting? What extra steps might be involved in the process? Conversely, are any steps missing?
o How long should an expense report linger in a manager’s inbox before the manager approves and forwards it along?
2. Cross-reference the employee manual, intranet, or resource center.
o This can help you determine whether your company is explaining the expense managing process. If you’ve experienced issues or complaints lately, the solution might be in how well you’re communicating the expense process.
o This can also help you reinforce consistencies. For instance, it’s possible that some employees and managers have gotten lax over time, or might be inadvertently skipping steps. Both possibilities can lead to misreporting. If every report must include things like paper receipts, travel bookings, or credit card statements, use this opportunity to reinforce policies.
3. Identify gaps, inefficiencies, or other issues in your process.
o Is every employee using the correct, most recent version of the expense report spreadsheet? If not, this can contribute to misreporting, especially if the new spreadsheet reflects recent policy changes, or has updated the company’s calculations.
o Do you require managers to print and sign forms as part of the approval process? This can slow down the process, or even create situations where approved reports get lost in the shuffle of papers.
4. Align your expense reimbursement process with payroll and/or your accounting system.
o Together with managers, your accounting department can weigh the merits of different expenses, and help determine whether excessive spending is an issue.
o Integrating expense reimbursements with your payroll and accounting system can also help you speed up expense reports, and create a consistent reimbursement schedule.
5. Communicate expense processing rules, plus updates and changes, to employees.
o Knowing that reimbursements coincide with payroll, for instance, can encourage employees to turn in their expense reports quicker, which helps drive efficiencies.
o It can also help reduce their confusion if they’re wondering when they’ll receive their reimbursements. This can help them manage their personal expenses, and also help them budget their business expenses when they’re on the road.
Whether you value the paper trail, trust your spreadsheet, or rely on expense management software, make now the time you evaluate your process. Doing so can help you plug gaps before hard and soft costs slip through.
Is it time that you evaluate your expense management solution? With a mobile-friendly expense management solution such as ExpenseWire, employees can track and report expenses from the road. No more lost receipts, or miscalculations that happen on paper.