Don't Throw Money Away By Not Monitoring Expense Reports (Infographic)
Once your company gets beyond 10 employees, dealing with expense reports becomes a real hassle. Business owners talk about what a pain it is to get employees to submit expense reports, and accounting must deal with piles of spreadsheets and receipts. Employees spend more than they should, unwittingly or not.
Small companies can benefit by injecting more process and automation into their expense-management practice. Doing so not only can make life easier for the accounting department and employees, but avoids needless overspending and can provide valuable insight into spending patterns that can save money later.
A recent survey conducted by my firm, Certify, found that at least 20 percent of expenses are in violation of corporate policy. Some companies don’t have any policies at all. We’re not really talking about employees taking advantage -- even though we do hear about the occasional expensing of unusual items such as hair salon appointments and pajamas. Typically, if there is no policy or the policy is unclear, employees pick the airline, hotel or rental car of their choice -- regardless of price. They might spend $200 on dinner for two, without much thought. All those little extra costs add up quickly.
What’s funny is that many small companies today are highly automated in areas such as accounting, HR and sales. In the world of business travel-expense management, however, small companies are still in the dark ages. Our survey showed that 47 percent of small businesses use spreadsheets for expense management, while only 25 percent use web-based systems.
Expense management isn’t always viewed as a top business priority for automation. Yet filing reports and getting reimbursed is a real thorn for employees. Nearly 40 percent of employees fail to submit expense reports on time. It’s no wonder -- hunting down those receipts and creating individual line items for each one can take hours of a busy work week.
Why should the small-business owner care? For one, an employee that lags behind on filing expenses tends to forget the details of the expense, which can make it tricky for reimbursement if a meal or trip can't be accurately attributed to a client or project. Poor tracking of expenses is just bad business.
Expense reporting, like other basic business processes, should be easy in today’s digital economy. Mobile apps are handling extremely complex tasks -- calculating wind energy or sending alerts when your garage door doesn’t close properly. By comparison, creating an expense report is a piece of cake for the average smartphone. Small businesses seem to be catching on that moving away from the heralded spreadsheet of days gone by isn’t such a big deal. Our survey showed that within the next 12 months, 54 percent of small businesses will switch to cloud-based expense systems. The typical return on investment is less than 12 months. Another perk: it saves employees time and reduces stress. That’s one less problem, right?
Check out the following infographic for more information about how business travelers spend corporate money, and how finance departments manage their expenses.