Running a business is an ambitious and challenging endeavour that necessitates setting out clear goals and frameworks pertaining to daily business operations. Whether it’s about laying out a plan on how to execute first-mile and last-mile operations or streamlining payment collection, everything needs to be planned out in a way that the team experiences maximum efficiency.
Every small-medium enterprise has its unique demands, but one aspect that is uniform across businesses of all types and scales is expense management. Expense management pertains to the mechanisms implemented by a company to handle, disburse, and scrutinize expenses initiated by employees. Considering the prevalence of this concept, all businesses must know how to execute it correctly, right? Not really.
Administrators frequently attempt to avoid using an expense management platform due to their complaints about its time-consuming and vexing nature. Nevertheless, this tool is pivotal for the company’s financial performance, ultimately saving time and providing enhanced control over daily operational expenses. In fact, it can be the decisive factor in determining your company’s success. This blog aims to clear some air around expense management and provides tips on how to plan it optimally.
Expense management can be broadly classified into two categories – expense management system’s features and expense management processes. As you answer the questions around these two facets, you will get a step closer to optimizing expense management.
Starting with the expense management system’s features, there are some questions that you must raise with regard to the automated expense management system that your company is currently using.
Does the expense management system…
Support receipt submission and claim approval.
The first step toward optimizing the expense management system in your company involves ensuring that the system is easily accessible to all your employees. Whenever an employee has to request a reimbursement, they would have to enter the necessary details in the system along with the receipt of the expense. All of this should be done without requiring the employee to walk to the finance department. Suppose your corporation still relies on manual expense management systems or the ones that require maximum human interference. In that case, it may be a good idea to rethink your choices and upgrade to a fully automated system.
Have the list of policies?
Policies are the heart of expense management. These policies should be embedded into the algorithm of your expense management system. Having policies ensures that requests for reimbursements of expenses that are not deemed valid are automatically denied by the system. If your company currently doesn’t have a clear set of rules or policies that outline what kind of expenses are reimbursable, do not wait any moment to get in a meeting with your accounting team to get the policies in place.
Let the administrator store receipts and requests.
Having a record of the reimbursements is important for generating accurate tax-related documents. Therefore, the expense management system should allow the administrator to store receipts and other documents relevant to a reimbursement request. It also ensures that duplicate receipts or requests are not processed.
Easily integrate with the accounting software and business account.
A good expense management system should easily integrate with the business account and the accounting system used by your organization. Having this integration streamlines the disbursal process, allowing instant transfer of funds from the business account. When this integration is not there, a company would be required to issue cheques to the employee manually. If you resonate with the previous system, it’s time to upgrade to an expense management system that integrates with your business account.
Issue an invoice after a reimbursement is approved.
An invoice serves as an official acknowledgment that the reimbursement has been accepted and processed. An invoice can serve as a sign that a request has been fulfilled, which can help employees track the status of their request. Businesses need to issue an invoice as it can benefit employees when filing for taxes.
Moving forward, below is a list of questions that you must use to assess the efficiency of your expense management process:
Is the company’s expense management process…
Automated with minimal human intervention?
Automation saves time and makes it easier to store and track reimbursement. If you think you have employed an automated service for expense management but still have your financial team dealing with a lot of paperwork and latency in settling requests, it’s a sign that you have brought changes to your expense management process.
Helping to improve employee productivity?
The ultimate aim of using an automated system is to boost the productivity of employees. It can be a good idea to conduct company-wide surveys to understand what changes your employees have experienced after you’ve upgraded to an automated expense management system and what aspects require improvement.
To conclude, optimizing the expense management system is not a one-time effort; rather, it’s a continuous process. As your company scales, your expense management system will need fine-tuning. Thus, it’s always a good idea to periodically assess the efficiency of the expense management system in use.