What is expense management automation?
Expense management automation is achieved through the use of an automated expense system to collect, store, process, and report on staff expenses automatically.
Often, these software systems will have in-built controls and limits which help to enforce your company policy for you and will feature an automated workflow that will take an expense claim and run it through an approval hierarchy.
Automating your expense management process can save a huge amount of time, not just in processing the actual claims but more importantly in reviewing and approving (or rejecting) the payment.
Automation as a time saver
When you think about processing expenses claims, what comes to mind? If it’s a piece of paper with a dozen scrappy receipts stapled to it then you could well benefit from automating your expenses system.
A good system will allow your staff member to take a photo of their receipt using a smartphone app and attach it to the online claim form as evidence.
From here, the employee can then submit the claim immediately and on-the-go rather than waiting until the end of the month, reducing the risk of lost receipts, and allowing accounts to start the repayment process earlier. No more scrappy paper and no more envelopes going missing in the post!
From a finance point of view, this removes entirely the need to input the expenses either into a myriad of excel sheets or directly onto the accounting system. Typically, a system will be set up to automatically code to the employee's cost centre and each item will be set to post to the correct expense line. The accountant will then do a quick review to make sure that things like VAT have been set correctly and will then click a button to send it on the approval journey.
A really good expenses system will have your finance staff singing its praises as they get on with more value-add tasks.
Automation as a control
There are three main reasons you need an expenses system:
- to reimburse employees
- to be compliant for HMRC
- to ensure staff aren’t spending over expense policy limits
With automation correctly set up on a modern expenses system, control is a simple matter and in practice can often be better than a manual method.
Control starts at the front end when the employee enters their expenses. They will select a category for the expense such as hotel or rail fare and the system will have the company policy already built-in.
When the system is set up, finance can choose to have the expense automatically rejected if it is outside policy or, more likely, they can ask that it flags it up for an approving manager to check. This removes the need for the accountant or approver to be constantly checking the policy for each expense as it is all done automatically.
Most companies will have at least one approving manager and this is where an automated expense system can be a great time saver. A good expenses system will have workflow built-in and expense claims will go automatically to the approving manager for review.
The approving manager can have confidence that things are coded correctly, the expenses fall within policy and that they only need to check for exceptions to the built-in rules.
Often the claim will show expenses that are in policy and then flag others that have issues but with any line on the claim, the approver can check the detail entered by the employee and even see the original receipt. Once the approver is happy, they can click a button to approve or reject the claim – quick, simple and effective.
One of the best ways to upset an employee is to forget to pay their expenses or to pay the wrong amount due to ‘fat finger syndrome’. A great expense system will be linked up to both the nominal ledger (for posting the expense) and to the banking system to make payments. No more keying, no more mistakes.
A great automated expense management system is easier to use, saves time and gets the employee paid quicker. A win all round!
10 signs you need expense management automation
If you’re still debating whether or not to go for expense management automation software, here’s some key signs that it would benefit you…
- Finance staff are spending a lot of time processing expenses
- Complaints that it takes a long time to be reimbursed
- Expenses sitting on managers’ desks waiting to be authorised
- Expenses are increasing but you don’t know why
- Finance staff spend a lot of time chasing receipts
- You’re finding workarounds to make up for a cumbersome process
- You have to give field staff large amounts of cash in advance
- You feel like you don’t have control
- You can’t report on your expenses spend
- You’re putting off doing your own expenses
If you’re interested in what automating your expense management system can do for your business, why not try our Expense Savings Calculator and see how much you could save by using expense management software.
