There is one rule of business that is the same the world over – to make money, you have to spend it. Regardless of how big or small your company is, there’s no getting away from expenses. We’re not talking about the rent on your office or wages. We’re talking about the incidental expenses that your workforce will rack up while making the business money – travel, lunches, coffees and all sorts of ad hoc purchases.
Managing those expenses can be painful for employees and for finance. It’s a highly emotive issue for the employee because the initial expense often comes from their own pocket. They also tend to put it off as long as possible because it is such a tedious, admin-heavy task.
But what are the implications for the business for having a sluggish, manual expense process in place?
The hidden costs to your business
Managing expenses can require a lot of back and forth communication between the finance team, the employee submitting a claim and that individual’s manager. Every query requires validation and approval – a process that can feel never-ending.
Lack of automated and defined processes are often to blame. We recently commissioned research with market specialist Vanson Bourne which shows that 33% of companies still use a mixture of paper and spreadsheets to process employee claims, which means mistakes are likely to creep in. After all, paper can get lost and it’s not hard to imagine the manual errors that can crop up when rekeying data into a form.
Plus, manual checking takes time. Every claim needs to be validated to make sure that receipts match the figures submitted by the employee, and each item needs to be checked against company policy to make sure it’s justified. The need for finance to manually rekey data is a problem for 29% of companies according to our study – clearly they could be using that time for better things.
Employees get frustrated
You would think that your employees are highly motivated to submit expenses, but the process can be so tedious that individuals choose to let their claims stack up. Chances are they have to deal with the paperwork in their own time, which can be a cause for serious resentment. However, delays are costly for all concerned. In fact, 39% of companies say that the ‘stacking’ of expenses claims is a real problem. The manager who needs to approve all those claims then has a real headache getting through the backlog, as does the finance team. And it can result in an unwelcome hit on company cash flow.
But the frustration doesn’t end with submitting expenses. Employees often wait a long time to be reimbursed too. The average time is nine days from approval to reimbursement, but in 20% of companies it can take more than two weeks. That’s a long time to be left out of pocket.
You miss out on valuable reporting and insight
It’s not just the obvious costs of wasted time and potential processing errors that you need to consider. By not managing your expenses in a smart way, you also miss the opportunity to analyse spend patterns. Accurate reporting allows you to spot trends in employee expenses, highlight anomalies and identify ways to make savings in the business. Without accurate visibility, it’s difficult to provide this additional value.
If you need to make improvements to your expenses process but are unsure where to start, download our whitepaper, 'The Blueprint of a Best Practice Expense Process', call +44 (0)203 866 8800, or watch our recent webinar recording, 'Taking the Pain Out of Employee Expenses':
N.B. this blog post was originally published on the Concur website in February 2017.