Expense management can be daunting – find out how a dedicated solution can help you overcome the most common challenges.
Money is the lifeblood of any business. Every business must spend money in order to make money, but it’s whether or not you can strike a healthy balance between the two that determines your organisation’s chance of long-term success.
It’s often easier and more exciting to focus on revenue flowing into the business through sales, rather than worrying about expenses the flowing out of it, which can range from small, everyday items of stationery to large, one-off IT purchases. But it all matters to your company’s bottom line.
Unfortunately, without the right systems and processes in place, expense management can be a daunting task. Getting it wrong not only has a material impact on the financial health of the business, but on the employees responsible for processing expenses.
On one hand, you need to ensure the expenses submitted are truthful and accurate so that the business doesn’t lose money through false claims. On the other hand, you need to make the process of reclaiming expenses easy for your employees so that they don’t struggle to get their money back – especially because of the potential impact on financial wellbeing.
So, what are some of the expense management challenges that businesses commonly face, and how can payroll and HR software help you solve them?
Manual processes damage productivity and financial wellbeing
First, as is the case with many processes that are labelled as ‘back office’ admin, expense management is frequently conducted using highly manual and outdated methods. A typical method is to ask employees to fill in a cumbersome Excel spreadsheet or form, to be submitted to the accounting team along with bundles of receipts supplied as evidence.
In other words, it’s a real chore – not to mention a significant commitment of time for employees who have to make expense claims on a regular basis. The result is lost productivity for the business and, more severely, an increased chance that the employee simply won’t bother claiming back their money.
In fact, research from Barclaycard found that more than a third (37%) of UK employees consider the process too much hassle for small reimbursement costs, while a similar number (33%) have opted not to reclaim expenses because of lost receipts. Overall, 59% of employees are failing to claim for costs they’re owed - amounting to an estimated £962 million each year. So there is a clear relationship between poor expense management practices and the financial wellbeing problems faced by many employees – as well as the productivity issues faced by businesses.
Implementing a dedicated expense management solution, ideally built into your payroll and HR software, helps your business to provide an intuitive, reliable, and quick experience. You can submit, approve, and pay expense claims in no time without the use of paper, with the ability to add multiple expenses to a single claim if required. Many modern solutions also allow you to capture receipt images via smartphone or tablet, to submit as part of a claim.
Errors are frequent and costly
No matter the size of your organisation, maintaining accurate accounts is essential to ensure compliance and to establish a clear picture of the company’s financial health. This is made all the more difficult when outdated expense processes make errors much more likely to occur.
Compared to a user-friendly software tool that anyone can operate, spreadsheets can be complex and challenging to understand. An accidental slip of a finger on your keyboard can break an essential formula (perhaps without you even noticing), and the numbers can suddenly look very different.
Sometimes the nature of an expense makes it difficult to report accurately. The classic example is car mileage. Spending time calculating the exact number of miles driven can be a time-consuming exercise that doesn’t always result in an accurate figure. A modern expense management solution can take the pain out of this process by integrating with tools like Google Maps to calculate accurate mileage claims.
And what about the ease with which a receipt can be lost or destroyed, without the ability to store it electronically? It can force an employee to make a rough guess of how much was spent on an item, and they may not even be able to make a claim at all without the receipt as evidence. Again, expense errors are costly for both the business and its people.
There’s a lack of control and visibility
It’s also important to think about the big picture when assessing the potential impact of these errors. If expenses are continuously reported incorrectly, it can lead to a lack of control and visibility for budget controllers as well as for those at the top, including Finance Directors and the Chief Financial Officers.
This makes it easier to mismanage budgets and to create the impression that costs are spiralling out of control, when in fact this may be the result of inflated expense claims. Consider that if a department’s budget is cut due to mismanagement, it ultimately reduces the positive impact it can have on the company’s core objectives.
At the most fundamental level, an effective expense management system needs to be underpinned by clear and consistent policies. However, imposing manual and inconsistent processes often leads to policies being ignored – if they are even communicated to employees to start with. A dedicated system helps your organisation to keep all of this vital information in a single, easily accessible place. For example, you can strengthen staff knowledge of company expense policies by attaching them on claim forms stored within the system.
Does your organisation need an expense management solution?
It’s difficult to put an exact number on the amount of money businesses lose every year due to false and inaccurate expense claims. But it’s fair to say that if your organisation is currently relying on spreadsheets and other tools that aren’t fit-for-purpose, there’s a strong chance it’s having a negative impact on the financial health of the business. This is not only because the expenses are wrong, but because productivity suffers too.
If these challenges sound familiar, it may be time to consider a stronger solution for expense management through your payroll and HR software. At Zellis, our award-winning software, ResourceLink, offers advanced functionality to streamline and simplify expense management.
To find out more, get in touch today.
If you’d like to discover more about ResourceLink or how our people can help you transform your payroll and HR operations, we’d love to talk.Talk to us