Mastercard report says that T&E costs the second-highest expense incurred by firms, only after labour. The average cost of all functions like expense accounting, processing, audit, compliance, and program management ranges between 11% to 23% of the total program. That is, if T&E costs your company, say, ₹1,00,000. Then, the back-end takes almost ₹17,000!
An expense management system is an excellent way to cut the confusion of manual processes while saving your business time, money, and resources.
In this blog, let’s see how!
How Can Expense Management System Help?
#1: Helps Set And Configure Your Expense Management Policy
An expense management system enables you to configure your system according to your business needs. You can set multiple expense policies for different grades and seniority, etc. It also allows you to set organisational expense limits over various categories. You can also define multiple advance policies and also a claims expiry policy.
Having an expense management policy is essential. The employees must know which expenses are covered and which are not. Having an expense policy in writing ensures there is no confusion.
#2: Reduces The Paperwork
Manual expense management means humongous paperwork and toggling between spreadsheets.
Employees submit paper receipts and forms, and the accounts or finance department has to check these forms against receipts and enter the data manually into spreadsheets. This is a time-taking and error-prone process.
Whereas an expense management system eliminates the need for manual input or checking. Employees can upload photographs of receipts from their mobile or desktop app, and the system will automatically read the receipts.
Thus, the software saves time, effort, and resources.
#3: Regular Expense Audit
26% of respondents of a Tallie survey say that they do not know whether the submitted expense reports comply with their corporate expense policies or not. Also, their existing systems can flag only about one in four non-compliant expenses.
This is a considerable audit flag for internal and external auditors and a cash drain.
Expense management systems put a full stop to such loopholes. They ensure you do not pay for expenses out of your company expense policy. A smart algo automatically flags inappropriate entries saving you money and audit issues.
Moreover, continuous audit means you can review under which categories you incur what expenses. This enables you to optimise your policies and regulate costs accordingly.
#4: Maintains A Centralised Database
An expense management system maintains a centralised database. A centralised database means all the data is stored in a single place. The receipts the employee uploads, the approval, the feedback, everything is in a single place.
Thus the workflow is super simple. You do not need to upload receipt information. As already told, it automatically gets registered in the database. The manager or approver can quickly approve the already segregated entries.
These approved entries can be directly sent for reimbursement to the integrated payroll software. Also, since all the data is centralised, it is easy to extract policy optimisation and analysis reports.
#5: Simplifies The Expense Reporting System
Handling paper receipts is an uphill task as they rip, fade, and get misplaced and requires the patience to compile paper receipts and fill out forms.
Trying to figure out the contents of a faded receipt is a task any employee or finance department official despises to the core. And reading it wrong only creates confusion and hostility between the employee and the organisation. Employees become sceptical about spending their hard-earned money on company expenses.
A robust expense management system helps makes sense of all the confusion.
#6: Keeps Compliance On-Spot
Tax laws differ from place to place. And following all of them, whether international or domestic, is an uphill task. Fair compensation also changes with the locality.
Expense management landscape changes with location. Thus a sound expense management system is of great utility. It has all the tax compliance pre-built. What’s more, the vendor updates changes in compliances ta their end. Thus there are no hassles or confusion, and no resources are wasted in learning and applying compliances that can be easily automated.
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