Reimbursement management is imperative for the financial health of any company. Whenever an employee makes a purchase on behalf of the company from his own pocket, the company is responsible for repaying for those expenses. For this purpose, the finance team has to track employee expenses efficiently.
For businesses, meticulous reimbursement management is also essential for tax audits and for claiming deductible expenses. With proper systems to organize and track your expense reimbursement, you can save money and time.
You can manage your company’s expenses using expense reimbursement software. It simplifies expense tracking and gives you real-time insights into employee spending. Additionally, It boosts the reimbursement process by eliminating the need to file paper receipts and automating the procedure. Consequently, it increases the company’s profitability by reducing unnecessary expenses and increasing the organization’s productivity.
Listed below are 8 ways expense reimbursement software helps manage your expenses.
When employees go on a business trip, collecting receipts and storing them until the end of the trip to file for reimbursement becomes a hassle as they are prone to be lost, damaged, or stolen. Consequently, without proof of expense, the employee would not be able to file for reimbursement.
The finance department also has its hands full with managing physical receipts. One of their primary concerns is the searchability of a specific receipt since they are often stored in various folders. Therefore, it can be time-consuming to find one. Additionally, keeping receipts in the office create clutter and incurs storage cost.
Expense reimbursement software or expense management software makes it easy for employees to file their expenses while they are on the go. They can click a picture of their receipt, upload them to the software, and then create and file their expense report with just a few clicks.
The finance team also benefits significantly from reimbursement software. Since receipts are stored on a cloud, they can be accessed anytime and anywhere. Additionally, searching for digital receipts is much easier than going through folders of physical receipts and can be done in a few clicks.
Moreover, the software also helps keep employees’ information secure by allowing them to use a single sign-on or dual-factor authentication feature to keep their app locked. This prevents unauthorized access to receipts and personal information.
Policy violations happen when employees are unaware of expense policies or find them too complicated to understand. A survey suggests that two-thirds of employees don’t read their company’s expense policies.
Verifying each and every expense claim against the company’s reimbursement policy is cumbersome and inefficient when done by a person. Therefore, policy violations are inevitable when expense verifications are done manually. Additionally, if non-compliant expense claims are accidentally reimbursed, it can provoke employees to submit false claims intentionally.
Many employees try to file duplicate or inflated claims in order to get reimbursement, as manual processes have too many gaps to notice such fraud.
According to a survey of 1000 workers, close to 82% of employees have lied on an expense report and haven’t been caught by their managers, and on average, the spending was exaggerated by $38. Another report states that expense fraud costs the US economy approximately $2.8 billion annually, with 76% of those fraud committed by employees using manual expense submission processes.
If your company is struggling with policy compliance, implementing expense reimbursement software is the right solution. The application integrates with the company’s expense policy. So, when an employee files an expense claim, it flags any out-of-policy expense, duplicate claims, or fictitious expense.
Further, it notifies both the employee and the approver of such claims and prevents the employee from filing such expenses. Consequently, the automatic fraud detection feature passes on only compliant expenses to the manager, saving your organization time and money.
Usually, when an employee submits their expense report for reimbursement, they are manually analyzed via spreadsheets and graphs. In fact, according to IBM, 58% of large and midsize companies use spreadsheets to collate and evaluate their expense data. This method is often cumbersome and prone to errors, making it quite unreliable.
However, a detailed view of business travel analytics is essential for higher management to make crucial financial decisions. A lack of visibility into employee spending can hamper the organization’s growth due to unidentified areas of cost leakages. Moreover, it makes it challenging for executives to draft and enforce expense policies.
Additionally, the finance team also faces difficulty in identifying sudden or unexpected changes in expenses due to a lack of real-time spend data. In order to avoid these financial roadblocks, it is crucial to have a system in place where they can track employee spending instantaneously on a single platform.
An expense reimbursement software solution can help make things run more smoothly for both employees and the finance team. Whenever an employee files an expense report, the software can instantaneously transfer the expense details to the expense tracking dashboard.
This way, the finance team can get a consolidated view of the expense data and identify any employees who may spend frequently, violate policy or show abrupt spending patterns. It also makes it easier for the higher management to formulate policies and identify areas of cost-cutting.
Reimbursement filing traditionally requires employees to email a complete folder of receipts and the expense report to their manager for approval. If any modifications are needed, the manager has to communicate these changes with the employee, which often requires a lot of back-and-forth emails.
Occasionally, due to high workloads, the managers or finance team can miss the approval emails, further delaying reimbursement. However, these problems can be solved if the approval workflow is automated and streamlined. So, it highlights the importance of automated expense management system for the finance team.
The expense reimbursement software automates the reimbursement workflow to make things more efficient. With advanced software, you can customize the hierarchy of the workflow queue and make the process quicker.
Once the employee submits the expense report, it is automatically verified by the software and sent to the manager. The manager then receives a notification on the application about the reimbursement request.
If any changes need to be made, he or she can immediately contact the employee through in-app communication features. Then the manager approves the expense, and the request is automatically transferred to the finance department.
After they authorize the expense, the amount is directly deposited into the employee’s bank account. Having an automated workflow ensures that only valid expense reports are sent to the manager and saves time for the organization.
The finance team is responsible for processing multiple reimbursements. In order to do this efficiently, they need quick and easy access to receipts, employee details, and the accounting system simultaneously. Unfortunately, the finance team has to access these details through different channels, such as expense reports and accounting software.
Additionally, they also often have to enter the same expense data into different systems. This is because expense spreadsheets cannot integrate with other systems, such as accounting software.
Read here – Spreadsheets vs Expense Management Software
Hence, the finance team has to transfer data to the ERP software manually. But, manual entry is prone to errors. So, if an amount is entered incorrectly, the finance department will have to cross-check all entries when filing for tax returns.
One way to resolve this challenge is by integrating the reimbursement system with other departments so that data only needs to be entered once. Expense reimbursement software can quickly and easily integrate with pre-existing third-party software, such as accounting, payroll, and HR applications. This way, the data on reimbursement software can be transferred to third-party software without errors and delays.
By having a centralized reimbursement platform, the finance team can get an all-encompassing view of every detail in one place. This includes the status of pending reimbursement requests, processed requests, and any other relevant information.
Having this information readily available saves time and effort that would otherwise be spent on completing these tasks. Therefore, allowing the finance team to focus on business-critical activities such as financial planning.
A lengthy reimbursement process can cause employees to spend their money on business expenses and wait for days or weeks to get the money back. This can put a strain on their personal finances and, as a result, their decisions to take initiatives for the business that requires expenditure.
According to a survey, almost 1 in 4 participants have postponed or canceled a meeting to prevent paying for expenses out of their own pocket. And more than 1 in 3 employees didn’t apply for reimbursement if the expense total was less than $7.
Expense reimbursement software helps employees get reimbursed faster by allowing them to submit expense reports on the go, automating approval workflows, and auto-verifying expense reports against expense policy.
With this type of software, the expense reimbursement process usually only takes a few hours instead of weeks, like the traditional method. This improves employee satisfaction and productivity since they don’t have to wait as long to get their expenses covered.
Moreover, employees can view their reimbursement status on the application reducing the number of queries for the finance team.
All companies require a streamlined system to track and document their expenses. Additionally, they want to ensure that all the reimbursed expenses have proof of compliance and can be tracked back to the employee who made that expense.
For this purpose, they have to maintain audit trails. An audit trail is an accounting record containing a transaction’s details, including any additions or deletions.
However, creating audit trails manually is a very difficult task since it involves the entry of multiple logs, including modifications and cancellations made during any transaction. In such cases, expense reimbursement software is highly useful.
The software is beneficial because it creates digital audit trails. This means that all information related to a particular transaction is stored. For example, an audit trail would have the details of contracts, receipts, and other essential information such as date, time, and user associated with a bill.
Audit trails are an essential part of reimbursement management because they provide a company with a record of when, where, and by whom an expense was made. This is especially useful in cases of fraud, as it can help to track down the origin of the expense. Audit trails also help companies with risk management and business travel budget planning, ensuring transparency and preventing employees from committing expense fraud.
A significant number of expenses that are eligible for reimbursement come from travel and transportation-related costs. However, companies oftentimes have to rely on manual methods to calculate and reimburse mileage, which can be troublesome.
This is because employees may inflate their travel-related expenses or give inaccurate details about their travel, making it difficult to keep track of precise mileage details. Not only is it important for companies to keep track of these details for reimbursement purposes, but they are also essential for tax audits.
Expense management software is designed to help solve the problem of tracking mileage for reimbursement purposes. This is done either by having an in-built mileage tracking system or by seamlessly integrating with a third-party mileage tracking application such as Google Maps.
With this feature, employees can use expense management software to track their mileage when they are on business trips. The software automatically calculates the reimbursable expense by multiplying the mileage rate by the miles traveled. The current mileage rate for business purposes is 62.5 cents per mile, which is 4 cents higher than last year.
The above benefits make expense reimbursement software a one-stop solution for your expense-tracking needs. With this software, you can improve your company’s financial well-being and keep your employees satisfied.
ITILITE is an advanced expense reimbursement platform that allows you to keep track of reimburse employees with ease. With features such as mileage tracking, digital receipt scanning, and a robust analytics dashboard, employees can file error-free receipts that lead to quick reimbursements. The approvers get real-time notifications to approve the expenses. Not just that! The finance team get a comprehensive dashboard for a seamless expense-tracking workflow.
Book a demo to experience these features yourself and enhance your expense management system.
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