Manual cost management may be just as inefficient, time-consuming, and error-prone as any other manual process in a business context. However, a recent survey showed that many companies are still using this method, despite the fact that doing so prevents them from taking benefit of automated expense management.
Nearly half of all businesses (46%), don’t track how much is spent on processing employee expense reports. Even in 2018, 43% of organizations were still relying on manual techniques to manage the expense reporting process. Almost half of organizations (44%) cite “our existing methods work well enough” as the reason they have no plans to invest in a dedicated travel and expenditure management system.
Potential cost savings associated with automating this part of business operations have been extensively studied. Eighty-two percent of businesses that have invested in or intend to utilize technology to enhance cost management have done so because they want to simplify expense reporting for staff and management.
Another important consideration is the need for the company’s expenditure management activities to be centralized on a single platform, as opposed to being spread out over several spreadsheets and bits of paper. So what is expense management?
Plan for Controlling Expenses
One of the best ways to control employee spending is to implement a strict policy that must be followed by all staff members. If a cost is rejected or questioned, a policy may be referenced to provide an explanation and provide support for the final decision to pay or not.
Any plan for cost control should have the following elements:
- Specifics of what will be paid for by the company, broken down by category.
- Extensive monetary obligations that the company will not assume for any reason.
- Simple, direct language (to ensure that there are no misunderstandings on what is and is not permitted).
The company’s expense management policy should be reviewed and revised on a regular basis. As your business develops and expands into new sectors, it may be necessary to make adjustments to your policy to reflect the changing circumstances.
Include best practices, such as mandating pre-approvals for particular spending, clearly identifying the processes of the approval process, and other components that might assist minimize possible difficulties when someone flags expenses. These are included in the list of best practices because they assist lessen the chances of issues arising.
Expense management? What does it even mean?
An expense management system is a piece of software that helps streamline the process of reimbursing workers for business-related costs. The tool greatly reduces or eliminates the need for paper, the amount of time spent on budget management, and the number of errors made.
In what ways might a system be used to manage expenditures?
This system streamlines the process of recording, tracking, approving, and paying for employee reimbursement expenses. The expense management program ensures that only authorized expenditures are made, preventing the organization from losing money on any costs that should not have been.
An organization may make better decisions regarding future spending with the use of analytical tools included into an expense management system, and this data can then be utilized to influence any necessary policy changes. Finally, the system offers accurate information on all charges, which aids businesses in staying compliant and accountable.
