The concept of expense management is not new. Whether you’re in a not-for-profit organisation (NFP), a for-profit company, a small business or a large corporation, chances are, your organisation and finance department is no stranger to the world of expense management.
However, just because all organisations practise expense management, doesn’t mean that they’re all doing so efficiently. Let’s talk about streamlining expense management and its advantages.
Before we dive into the advantages of streamlining expense management, we must first understand common business expenses to see why expense management matters in the first place.
1. Office and utility expenses
Utilities such as internet connection, heaters and air conditioners, water and electricity are all common office expenses. Additionally, rental and maintenance costs are also business expenses that need to be accounted for.
2. Employee wages
Employee wages and benefits are usually the largest expense for a business. Employee wages also include commissions, hiring costs and retirement contributions.
3. Licence and subscription fees
A licence fee refers to funds that a company pays, for the ability or right to use a property or asset. Such assets include software, copyrighted work and patents. If an employee’s everyday work involves assets like premium Zoom calls and Photoshop features, these were likely paid for by the company.
4. Training fees for employees
Knowledge is power, but oftentimes, it doesn’t come cheap. The cost of employee training is included in common business expenses that the company pays for. Employee training programs include sales training, product training and leadership training.
5. Corporate travel expenses
When an employee travels, they usually pay for their meals, transportation and tickets using corporate credit cards. Other times, companies opt to use virtual cards for a more efficient process.
Advantages of Streamlining Expense Management
Given the many business expenses that a company deals with, it only makes sense to streamline expense management through an automated expense management platform. Let’s take a look at its advantages.
1. Improved efficiency
Imagine still using manual spreadsheets at a time when you can simply use expense management software. There’s so much room for human error! There could be a missing zero, a misplaced decimal point or even a completely blank cell that you forgot to fill out.
An automated expense management software allows staff to submit expenses quickly without having to manually type in numbers. They could just snap a photo of the receipt, and the software will automatically read and process it.
2. Enhanced accuracy and compliance
Streamlining expense management reduces the risks of mistakes and incorrect calculations. Say goodbye to manually counter-checking a report’s accuracy as the software will do that for you!
Streamlined systems can also ensure compliance with company policies and regulatory needs. With a streamlined system, you get to enforce policies and rules as the software helps you flag non-compliant expenses.
3. Real-time visibility and finance reporting
Think about all the time (and stress!) you spent having to wait for an expense report and verify it with data from weeks or months ago. With streamlined expense management, you get real-time visibility into expenses as employees upload their receipts in real time. This allows you to spot any trends or patterns in employee spending, as well as areas of excessive or unnecessary spending.
When you have up-to-date and real-time information, you get to take a more proactive approach when necessary. You don’t have to wait until the end of the month (or the year!) before you take action on any red flags that the system will raise.
4. Data analysis for strategic planning
A streamlined expense management process is not just for handling your expenses. It’s also for identifying patterns and trends and analysing data.
The data and insights you get from your expense management platform can help you with vendor selection, payment terms and supplier management so you can better manage business expenses.
5. Cost savings and expense control
When you reduce manual processes and streamline your expense management, you get to save on money that you usually spend on administrative fees. Plus, your existing admin staff get to focus more on tasks that require their attention.
Also, owing to the insights that the expense management software provides, you get to see spending patterns that help you identify areas where you can reduce costs.
6. Improved employee experience
Think of the last time an employee was extremely stressed out from all the numbers and analyses they had to deal with. If you still haven’t streamlined your expense management, chances are, this was not too long ago.
A streamlined expense management system provides a better experience for employees because tedious and repetitive tasks can be done by the software. This allows the staff to focus more on their tasks that cannot be automated and require human skills and strategic thinking.
7. Reduced fraud and policy violations
In addition to providing visibility that reduces fraud, a streamlined expense management system also makes it easier for you to conduct audits and spot fraudulent activities. If your company still uses manual expense management, admin and finance personnel will likely overlook fake or fraudulent entries from employees or contractors.
A streamlined expense management system helps you with your auditing so you can easily spot a questionable entry or discrepancy.
Streamlining expense management doesn’t have to be complicated. This transition will allow your employees to focus more on their productivity as they trust automation to do their repetitive work. Your business can mitigate the risk of fraud, have better spend insights, be more proactive and make better, strategically driven financial decisions.
