As every other department is going through digital transformation, Finance function and processes are not to be left behind. The advancements in technology are impacting how Travel expenses are captured, submitted, audited, approved and reimbursed in expense management.
So, organizations deploying automated expense management solutions could cut down expense processing cost by 75% in comparison to manual processing of expenses. Additionally, They can also have better control on expense management including spending & compliance.
Here are the hurdles while managing the Travel and Expense:
Due to manual process of managing the T&E a lot of productive labor hours are tied up and managing the excel report and cross verifying the reports for policy compliance results in increased cost.
Due to delayed submission of expense reports, input tax credit is missed which results in increased cost, thus, to minimize the cost of managing T&E we need to automate the entire process.
When it comes to managing the travel & entertainment expenses, it has always been a cumbersome process. As per a survey by Aberdeen, Travel and entertainment constitutes 8-12% of operating expenses. Managing this large chunk of expenses can be daunting for any finance and IT leaders. We need to have an easy & simple process so that it is not a burden on the employees & organizations, and people are more likely to comply.
45% employees fail to submit their expense reports on time. If there are multiple layers of administrative complexity such as filing multiple forms & long approval hierarchy, it would have a very daunting effect on your employees & it would lead to wastage of valuable labor hours.
Having such cumbersome manual processes can lead to some serious errors. Having complicated processes may also lead to the risk of employees overstating their expenses to compensate themselves for the pain of claiming them. A finance person will have to invest his valuable time to cross verify the reports & look after the policy compliance.
1/3rd employees submit reports with 5 or more errors. Reconciling & reviewing the expense report is a cumbersome process. In order to omit errors & follow all the policy compliance, we need to have a robust & simple automated process to manage travel & entertainment expenses appropriately & ensure that the expenses are timely paid and approved by the right person, adhering to the corporate governance.
One of the best practices is to have a proper time-frame for submitting & approving the expenses. If the employees want timely reimbursement, then they need to file the expense reports in the subscribed time frame. If the employees do not submit their expense report on time, it not only costs to them cost to the organization as well, as they are not able to claim their input tax credit on time and hence adding up to cost. It is a big challenge for companies to minimize their cost.
76% of the organizations who have a consolidated T&E policy are unable to implement it.
30% CFOs view Reviewing Expenses for Policy Violation as the biggest pain point.
38% CFOs believe that reconciliation and reviewing expenses is the biggest pain point of expense management
Policy compliance has always been very important for all the organizations if policies are not violated then it becomes very costly for the organization. Lack of visibility & transparency has always been a major issue in manual process of managing the expenses.
Organizations need to have policy integration with automated rule checker & rule by-pass allowance to enable quick & efficient decision making. Increased visibility into travel & entertainment expenses would help you save time as it takes a lot of time to cross verify the policy violations and a lot of labor hours are wasted, through integrated policy checker it becomes time & cost saving.
Hence, in order to be time & cost effective, we need to integrate the T&E policy with the automated solution.
Integration with travel desk & service providers helps to organize a planned trip. Employees often do their own booking & take their own routes, thus losing out on the negotiated deals; employees missing out on such negotiated deals miss the option of cost saving of an organization, unauthorized travel bookings need to stop. Companies need to have an option of authorized business travel booking & all the queries related to travel, cab, the stay should be resolved at one place so that there is a track of every single amount spend and thus we are able to save costs and stop fake charging of expenses.
With the rapid advancement in technologies, T&E management has been shifted to strategic methods rather than normal manual functioning. Analytics has been one of the most important means for organizations.
In the manual process of managing the expenses, it becomes a tedious task to review the reports as and when needed. Using analytics, we can cut down the extra cost as we can track the expenses as per our requirements and increased visibility into the expense management provides us the benefits of taking corrective actions on the areas we lack.
Analytics helps us in providing real-time data of how much spending is being done, and where we need to cut down the budget, thus enabling organizations to compare our budgets and ensures that we are not spending more than the budget allocated.
So, we can take effective decisions based on information presented in the dashboard in a simpler & visual form & which helps the organizations to identify the patterns of spending and thus able to draw a meaningful conclusion in order to maintain or cut down cost.
Consistent use of the best practice process will direct you to save cost and time and providing employees a better & improved experience than earlier, as they use to face a lot of issues in the filing of an expense report. Best practice of using automated solutions would help you gain visibility into expense management, providing you with real-time data & allow you to keep a track on spending i.e. there should be no negative impact on budget.
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