Business

4 Best Practices to Effectively Handle Your Expense Management Processes

expense management process

Businesses must effectively create Travel & Expense (T&E) policy to manage their expenses effectively. Creating a T&E policy for the company is not an easy task, as it requires more research work. While creating the policy, you have to consider various aspects, including the company’s budget, employee’s expectations and their comfort, and safety during the trip. It is also equally important to look outside your company and analyze what practices your competitors are implementing to effectively manage their employees’ travel expenses. With proper research, you can refine and enhance your expense management program.

Every company will have its objectives and it works differently. The expense policy of your competitors may not suit your company’s objectives or working processes. So, simply copying the expense policy of other organizations is not an effective way. You need to analyze the pitfalls of your existing expense management processes and accordingly define, implement and enforce best practices that ensure a successful expense process. Especially, automating the manual, paper-based processes help you increase the accuracy and operational efficiency of the business while also reducing costs.

In this article, we have discussed a few most effective practices that help to properly manage your expense management process.

How to Manage Your Expense Management Process

Pre-Approvals

Collating the employees’ expense reports and verifying them against T&E policy terms is tedious. Employers have to spend their valuable time identifying and eliminating the expenses that are not covered under the policy. On the other hand, delayed reimbursements or rejections in the claims can affect the employees’ productivity. You can cope up with these two issues by adopting an expense software that allows you to configure pre-approvals for employees’ travel expenses.

Instead of allowing the employees to spend more money during the travel that may get rejected for reimbursements from the company, it is better to restrict them from making out-of-the-policy purchases. In simple terms, if you can restrict the employees from making the out-of-the-policy expenses, there is no point in rejections. You can greatly reduce the employees overspend issues by mandating the pre-approvals through deliberate expense abuse. The pre-approval process usually works well with corporate purchasing cards that allow purchasing travel tickets, office supplies, etc. Employees can browse their tickets and purchase directly from the system after approval. With the expense management software, the approvers can set up an automated approval workflow for the purchases under a specific amount based on the employees’ roles and groups.

Centralize the Travel Expense Process

Businesses have to track the expense reports submitted by the employees and verify each expense against the expense receipts while reimbursing employees’ costs. This process requires the finance teams to spend their valuable time that can be used for productive tasks which can add value to the organization. Plus, the process of tracking and validating the expenses requires a considerable amount of manual intervention, which can add up to a significant workforce spread across various branches of the organizations located in different regions. This process lacks proper transparency and consistency in the process and also costs a lot of money. Prior to implementing an expense solution, most businesses have faced a lot of issues due to the manual processes. With an expense software solution, companies can automate most of the manual processes and reduce the need for human intervention.

The moment the employees enter the expenses, the software automatically validates them against the company’s T&E policy and restricts employees from making out-of-the-policy purchases and submitting non-compliant expenses. In some cases, the software even makes it mandatory for the employees to provide a proper explanation for their costs that will help the finance team to approve or reject the claim request. Some advanced solutions even enable the approvers to create an automated workflow for the expenses based on cost, project, employee group or department, etc. Plus, the software automatically detects and flags duplicate invoices at the time of entry itself, helping the finance team to prevent reimbursements to duplicate expenses. As almost everything is automated, approvers can focus more on the productive tasks that help to improve the efficiency and productivity of the organization.

Initiate a Corporate Card Program

If your strategy of employees making purchases with corporate credit cards backfire with reckless spending more liabilities, then you should possibly reconsider your decision. Today, many corporate credit card programs offer plentiful and highly competitive programs that provide numerous financial and operational benefits. We have listed a few benefits a good corporate credit card program can offer:

Corporate credit card programs offer many incentives and rebates for all the purchases made with the card. As per a research report, the companies that have already implemented the corporate card programs are receiving a considerable amount of money in the form of cashback, discounts, and other offers.

Proper implementation of corporate cards in the expense management process helps to reduce the cost of expense report handling. As the cards are integrated with the expense software, there is no need for the employees to rekey their expense data into the system. This prevents the employees from spending more time creating and submitting expense reports while also ensuring the accuracy of the data. Plus, the approvers can easily track and verify the expenses against the company’s policies and process reimbursements quickly.

Industry experts say that more than 20% of the expense reimbursement claims will have fraudulent or duplicate receipts. These kinds of expense frauds can be reduced or even eliminated by incorporating corporate credit cards in the expense management process. The expense software solutions with a corporate card help to prevent payments to fraudulent or duplicate expenses. Also, corporate credit cards eliminate the need for cash advances. This streamlines the expense reporting process and also eases the process for business travelers.

Most employees are concerned about the charges they incur for purchases made with corporate cards and the delay in the process of submitting expense reports associated with those charges. The finance teams should interact with the employees regularly to motivate them to properly use the corporate cards and promptly submit the expense reports and reimbursement claims.

Automate Policy Enforcement

The company’s travel and expense policies are difficult to understand and remember as well. However, automating the expense policy enforcement helps you eliminate the tedious tasks involved in tracking and verifying the expense reports submitted by employees against policy terms. This streamlines the processes and allows the approvers to process reimbursements to the employees quickly while also eliminating the payments to the out-of-the-policy expenses.

The Conclusion

Employees often participate in business travels to meet clients in-person and promote the company’s products or services. While travelling, employees may sometimes spend their money to meet their expenses during the journey. Businesses should reimburse these expenses as quickly as possible to enhance employees’ experience. Reviewing the employees’ expense reports and approving reimbursements to the employees with the traditional paper-based processes is tedious and time-consuming. The time-consuming processes can result in a delay in the reimbursement process and affect the employees’ productivity. Fortunately, automated expense management software solutions can help businesses automate the tedious manual processes and allow them to reimburse employees’ travel expenses quickly. This encourages employees to work more effectively, thereby improving the company’s productivity.

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