When you think about the benefits of automating the expense management process, it’s easy to conjure the image of a stressed-out business traveller who is fumbling with huge numbers of receipts, with all the dexterity of an infomercial actor. Fast-forward to the image of them happily snapping an image of the receipt on their mobile phone and then tossing it away with a carefree smile on their face, and you can easily see how much expense management software can streamline the lives of end-users.
While there's no denying that automating end-user processes and enabling hassle-free mobile submission of expense claims provides major ease-of-use and time-saving benefits for business travellers, the ROI that these benefits deliver is often dwarfed by the impact that expense automation has on the finance function. Whether it’s providing a streamlined, error-free approval and reimbursement process, ensuring policy and regulatory compliance, or delivering cost savings through insight gained by spend analysis, the most measurable benefits of expense automation are seen on the back-end.
To illustrate this, here are seven of the biggest impacts that expense automation can provide the finance department.
1. Streamlined, error-free expense processing and reimbursement
Just as automation can streamline the end-user expense process, it can also make life easier for the finance team that processes and reimburses expenses. The most obvious aspect of this is that removing paper from the process eliminates the need for data to be manually entered into the accounting or ERP solution. This not only cuts out huge swathes of time, but also eliminates the possibility of data entry errors. Once approved, expenses can be automatically reimbursed through a direct bank transfer, and any client-billable expenses can be directly added to invoices, without the requirement to re-key data into the GL system.
2. Corporate policy enforcement
Ensuring that all expenses complied with corporate policy often meant referring back to the employee handbook, and then confirming that meal costs, hotel categories and taxis are all valid and within bounds of the expense policy. As these policies can be automatically set in an expense management system during the implementation phase, not only do approvers not need to double-check if a certain item is permissible, but the solution can even be configured so that any expense that’s outside the parameters cannot be submitted for approval.
For organisations that have different tiers of allowable expenses, or if policies differ across geographies, top-performing expense solutions allow unlimited configurability of business rules, enabling expense policies to be configured even down to the individual user level. No more confusion for end-users or the finance team, and no conflict about why a particular expense item has been declined.
3. Fraud reduction
Expense fraud costs U.S. businesses nearly $3 billion a year, and much of this can be avoided by reducing the potential for false, duplicated or inflated expense items to be submitted for approval. The same business rules engine that automates expense policy compliance can also prevent users from trying to submit an expense that isn’t eligible for reimbursement (such as passing off dinner with a spouse as one with a prospect), and can also identify if a receipt has previously been submitted.
Integrating an expense management solution with a corporate card program (more on this below) can further strengthen a company’s hand in the fight against fraud. Two examples of how mandating the use of a corporate card can reduce fraud include removing the ability for employees to submit an expense and then receive a refund on the purchase, as well as ensuing that amounts submitted for reimbursement match those on a credit card statement (such as an inflated tip at a restaurant).
4. Regulatory compliance
While ensuring that corporate expense policies are adhered to can save organisations big bucks by avoiding wasteful spend, ensuring regulatory compliance can save companies many thousands or even millions of dollars in fees or penalties. Whether it’s complying with U.S. Sunshine Act reporting for gifts to physicians, Mexican XML receipt regulations, or Australian Fringe Benefit Tax, there are countless domestic and international requirements that organisations must comply with, or they could face severe legal consequences.
A truly global expense solution will have these requirements loaded into the system, so that any organisation that needs to abide by the regulations doesn’t need to worry about manually complying with them. For the finance team, this reduces a major headache, and can reduce the possibility of a costly audit and subsequent penalties.
5. Spend insights
Possibly the greatest financial contribution than an expense management solution can have on the bottom line is the ability to analyse many thousands or even millions of expense data points, to spot trends and identify areas of wasteful or inefficient spend. Expense systems’ analytics capabilities provide near-real-time insight into expenses from flight and hotel transactions to travellers’ out-of-pocket purchases, and can present this data in clear visual dashboards, which allow finance teams and business analysts to make more informed decisions on their organisations’ spend. This information can then be used both with internal and external groups to help drive down costs.
For example, data showing how much a business spends on accommodation or flights can be clearly demonstrated with simple data visualisations, which can be used in negotiations with hotel chains or airlines to secure lower corporate rates. Alternatively, if flight purchase data shows that one department consistently purchases tickets less than two weeks in advance, action can be taken by department heads to prevent this from happening in future.
6. Credit card reconciliation
Implementing a corporate card solution can have major financial benefits for any organisation, by providing substantial cash back on purchases made. Integrating corporate cards and expense management solutions makes the entire expense management process significantly more straightforward and efficient.
Directly importing credit card statements into the expense claim allows granular transaction detail to be collated, and can also enable each transaction on a statement to be allocated directly back to the purchase receipt submitted by the cardholder. For the finance team, this means no more manual cross-referencing of card statements, faster approvals, and fewer delays in card payments.
7. Third party integrations
Expense management solutions are often used as in conjunction with several other tools and technology platforms, such as online booking tools, corporate travel agencies, and HR and ERP solutions. Integrating these disparate platforms so that data can flow automatically flow between each system has major time and process benefits for the back-office team. Not only does it remove the requirement for data to be manually exported and loaded into from system to system, but it also ensures that each platform has the most accurate and up-to-date information on people and transactions. This speeds up processing times, eliminates the potential for errors, and makes analysis and reporting hassle free.
So, while business travellers will certainly appreciate the ease of use that expense automation brings, the real benefits that these systems can deliver will likely be experienced by the back office team.
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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.