Any corporate finance professional will tell you that an accurate and timely quarter close is one of the most critical parts of their role. As Chrome River’s head of finance, I need to ensure that I present an accurate account of all incoming revenue and outgoing expenses to Alan Rich, our CEO, so these can be presented back to the board. This process is repeated throughout the world, and companies ranging from early-stage start-ups to Fortune 500 multinationals must all perform this task.
Most of the data inputs used for quarter-end are taken from automated software solutions: sales bookings from the CRM system, revenues from the general ledger, corporate expenses from the invoice management system*, and so on. Another data input source is the employee expense management solution**, and while most employees are eager to have their expenses reimbursed as quickly as possible, employees who delay their expense submission can reduce the accuracy of quarter-close numbers. Even though most outstanding expenses may only add up a few hundred dollars per employee, these add up across the company. In addition, some sales executives and other frequent travelers who incur thousands or even tens of thousands of dollars of travel and entertainment expenses each quarter could have a material impact of the accuracy of a quarter’s numbers if theirs aren’t submitted in a timely manner.
And what is the biggest reason why expenses aren’t submitted on time? In my experience in speaking with “repeat offenders” with previous employers, the biggest challenge is simply the hassle of doing so. Although employees obviously want to get reimbursed for their expenses, the sheer headache of creating and submitting expense reports (both using manual, receipt-and-spreadsheet methods, and also cumbersome automated solutions) causes them to procrastinate. Of course, this can lead to somewhat of a snowball effect, as the receipts continue to stack up, and the task of submitting expenses becomes increasingly more onerous.
Related: Escape Expense Report Purgatory
While the pain of being out-of-pocket for thousands of dollars will soon become enough of an incentive for most employees to submit their expenses, I’ve known of examples of individuals having upwards of $50,000 of expenses outstanding over several months! Even though this is an extreme example, it illustrates how delayed expense submission can have a serious impact on the accuracy of quarter-close figures. A further challenge comes when employees use corporate credit cards to make purchases, as this removes the requirement for expenses to be submitted on time in order for the employee to receive reimbursement.
The obvious solution to this is to make the process of submitting expenses less onerous and time-consuming. One of the key ways to enable this is to allow expense receipts to be submitted as the purchases are made. Allowing receipt emails (e.g. from travel bookings) to be forwarded to the expense solution as soon as the booking is made is one solution here. A further one is a solution which enables travelers to capture an image of a receipt (e.g. from a restaurant) on a mobile phone and simply upload it directly into the system, where it can then be scanned using fully-automated OCR (optical character recognition), and an expense item be immediately created, ready for submission. This eliminates the need to keep receipts, so they don’t accumulate in a menacing pile on an employee’s desk.
A user-friendly expense application can also deliver significant benefits in encouraging timely submission of expenses. While it could be argued that since employees are required to use the mandated expense submission solution in order to be reimbursed, adoption and user-engagement aren’t really a concern for the employer. However, deploying cumbersome, unintuitive, software will certainly diminish engagement and will make users more likely to put off having to use the system. This again could lead to a delay in expenses being submitted, and therefore potentially inaccurate figures could be used for quarter-end metrics. To counter this objection, look for an expense tool that has an easy-to-use interface, which employees can revisit after months of non-use and easily remember how to capture and submit their receipts. The solution will ideally have the same look-and-feel across any device, so your team can use it just as easily on their mobile as a laptop.
Of course, if all of these fail, finance leaders do have other tools in their arsenal, such as enforcing a cut-off time limit for expenses to be submitted, or delaying when reimbursement is made. However, before a stick is used, the carrot of implementing an easy-to-use, mobile expense management solution will win you more friends from within your organization.
*, ** And yes, we use our own software to run our global business!
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.