Traditional expense management practices can not only lead to inefficiencies in the process but also expose the organization to risks of fraud and non-compliance. As business travel increasingly becomes indispensable, it’s imperative that the businesses figure out better ways to manage travel expenses among other employee expenses. The process of managing receipts and submitting expenses and creating reports needs to be automated and simplified.
In this blog, we will look at some of the common mistakes that businesses are making when it comes to expense management and how these mistakes are affecting their bottom line.
1. Unclear organizational travel policies
If the company’s travel and expense management policies aren’t clearly defined, it can lead to fraudulent activity. In addition, poorly defined policies can cause confusion between the financial teams and employees, often leading to employee over-spending.
Further, stringent enforcing of these policies is imperative to maintain compliance. Usually, finance teams have to figure out if each claim falls within company guidelines. Individual employees are expected to remember policies and self-ensure their compliance.
An expense management software such as Zaggle Save can enable finance teams to tailor policies as per specific business needs. This comes with automated synchronous policy-checks to ensure all submitted claims comply with the policy guidelines. This takes the onus off employees over remembering policy guidelines playing a pivotal part in enhancing employee compliance and reducing expense fraud.
2. Limited visibility into expense categories
Lacking visibility into data points such as the top-spending categories within an organization or the average amount of expenses incurred on meals can prove to be a hurdle. Unreported expenses, manual errors, and limited visibility combine to provide an unreliable representation of company expenses. Being unaware of these expenses at a macro level creates a considerable risk of going ahead with sub-par financial decisions. An absence of visibility along with poor financial decisions cost the business severely.
A robust travel and expense management software solution like Zaggle Save can help obtain complete visibility over corporate expense management.
3. Time-consuming manual tasks
In today’s landscape, time is of the essence. Quick turnarounds are essential for maintaining business quality, achieving business growth, and improving customer experience. Having to manually log data and enter reports is highly labour-intensive and time-consuming. In addition, this leaves a high probability of data entry errors which the financial team has to again manually look over. In the overall scheme of things, this causes a delay with reporting and disbursing reimbursements adding to employee dissatisfaction.
This further causes an increase in processing costs due to multiple errors in accounting, poor reporting, fraud, and delays.
An automated expense management software solution like Zaggle Save can help streamline expense reporting, processing, and reimbursements through automation. This will significantly reduce turnaround time improving morale and business operations.
4. Not maintaining adequate records
Lacking visibility into corporate spending trends will become a big hurdle while auditing or optimizing business processes. With no visibility or records, it is difficult to realize if employees are making unexpected expenditures.
Loss of important expense data such as receipts and forms reflects badly on the company and is cause for suspicion. Additionally, they offer incomplete insight into employee spending habits and cannot be used for making business decisions.
Further, the governing financial bodies require exhaustive records. In their absence, the most an organization can do is tweak and adjust financial budgets. Failing to produce detailed records can incur substantial penalties. Maintaining detailed records include having proof of expense reports, invoices, forms, etc. Additionally, having proper documentation also means staying audit-ready and complying with tax laws. It is imperative to maintain impeccable records and keep track of expenses.
With an automated expense management system, record keeping is made extremely simple. With a presence across multiple touchpoints, employees can upload expense details through the app, or through attachments in emails. This significantly streamlines the process and speeds it up.
5. Not maintaining compliance across different territories
Companies today have a global presence. With personnel often travelling internationally, it becomes essential to keep track of the many different tax laws across different countries. Manual reporting makes it is virtually impossible to get 100% accuracy. Most employees are not always aware that they need to save the receipts of their laundry services, for instance, as certain countries provide VAT returns on that.
The situation gets even more complicated when an employee travels to several countries in a single trip. There may be a conference in one country followed by client meetings in another country, and a trade show in another one - all on the same trip. All three countries will have their own VAT return policies as far as expenses covered, and all three will have their own deadlines for filing for the returns.
Automated expense management software can be configured with varying legislations and so the onus is on the system to ensure each claim is compliant. In case of any dubious claims, the required personnel is alerted to submit more information or go over the details once more.
Are you facing any of these issues?
Zaggle Save is an all-in-one business spend management platform that can empower your business to spend smarter and reduce time and effort. With Zaggle Save, data analytics creates a safe and secure mode allowing cash flows to be managed efficiently. This removes the need for time-consuming, labour-intensive paperwork eliminating cases of fraudulent spending.
With real-time expense reporting, smart scan, AI-powered fraud detection & prevention mechanism, enterprises can effectively handle various facets such as Travel & Expenses, Business Expenses, Petty Cash, Employee Reimbursement, and Benefits.
Please feel free to reach out to us in case of any questions.