Expense management is a crucial issue for all firms, but it’s hard to organise when employees have to rely on paper receipts and notes. Using software to track and monitor employee spending may speed up the process of expenditure management, reduce the amount of errors that occur, and shorten the time it takes to provide reimbursements.
Simply put, expense management is the process of keeping track of and reducing those pesky bills.
Employee spending is monitored, and the method by which those costs are recouped from the corporation is determined by expense management. In addition, it puts into action the procedures and regulations that are used to control the aforementioned expenditures. When determining how much money to pay employees for things like meals while travelling, the process of controlling expenditures will take such limitations into account.
The Importance of Expense Management
A corporation can’t stay open if it can’t meet its financial obligations, and one of those obligations is to its employees for reimbursement of business expenses. There will always be a need for an organization’s expense management department if it employs workers who must conduct company business away from the office. When an outside sales manager pays for a client lunch, it must be documented, approved, and then reimbursed.
Businesses may provide proper refunds in a timely manner if they have effective processes for controlling their costs in place. It’s annoying when workers have to wait months to get their money back after they’ve already spent it.
Methods of Expense Management that Vary
Among the many options available for controlling a business’s expenses are:
Methods for Document Management Traditional expense management included staff members compiling paper receipts before submitting them to the accounting department for approval once a month or three times a year; this approach, although convenient, has fallen out of favour.
This is a common choice for businesses who want to use less paper but haven’t taken the leap to a fully automated expense management system.
Budgeting tracking and organizing program
Making use of this tactic will simplify the process of budgeting. The software alerts supervisors when there are expense reports awaiting review, and the supervisors may then choose to either accept or reject the claim. After this is complete, the authorised expenditures are sent to the finance team for reimbursement.
Procedure for Managing Expenses
Reimbursement claims may be filed, reviewed, approved or rejected, scheduled for payment, and finally paid to the individual who spent the charge. All of these steps constitute expense management.
Businesses with the proper procedure in place can keep track of their expenses, check to see if their staff are abusing the system, and take immediate remedial action if they do (for example, informing specific employees that they are spending more than they should be in certain areas). A simple audit of a salesman’s receipts may reveal whether or not he has been flying first class without proper authorization.
Manual methods make it more difficult to detect such issues, which is particularly problematic for firms that are growing their field staff. Issues with incomplete data, spending being green-lit without proper due diligence, and lengthy review processes are prevalent. Employees’ time is wasted, and they are left wondering where their reimbursement payments went (typically at a time when they are already accumulating new charges for the next closure period).