Everything you need to know about expense management automation
Expense management automation has become an increasingly popular way to save time and money in businesses of all sizes. It eliminates labor-intensive systems by automating the process of tracking, approving, and reimbursing business expenses, eliminating manual data entry and paperwork.
Automation tools provide increased visibility into expenses and help ensure that policies are complied with. It also simplifies the process of filing expense reports and payments, reducing errors and significantly improving accuracy.
With expense management automation, businesses can both streamline their processes and at the same time save money.
What is expense management automation?
Expense management automation is a system that streamlines the processing of employee expenses. It replaces the traditional, manual forms of expense management which used to require heavy paperwork and labor. This is done by automating the entire process from employee submission of expenses to verification and approval of the expenses, to the payment of the employee.
Automation reduces the manual effort required to manage employee expenses, making the process simpler, faster, and much more accurate.
Automation systems also offer additional features, such as expense policy enforcement, automated reporting and analytics, and improved visibility into the expense process.
Automation solutions can significantly reduce the time and cost associated with the traditional forms of processing employee expenses, making it an essential tool for modern businesses of all sizes.
Traditional expense management process
1. Make a purchase/expense
This is the first step in the traditional expense management process. This step involves the employee incurring the expense to purchase for a particular business purpose.
This could include paying for purchases such as office supplies, meals, or travel expenses. It is important to note that the employee must retain all receipts associated with the business expense.
2. Collect and keep receipts
After the individual has made a purchase they must collect and store all receipts associated with the expense. This includes any invoices or other documentation that is related to the purchase. This documentation is important for the next step, as it will be used to create an expense report.
3. Create expense report manually
After the employee has collected and kept all receipts associated with the purchase, the next step is to create an expense report manually, either via spreadsheets or on paper.
This report should contain all of the details associated with the purchase, including the date of purchase, what was purchased, and the amount. This report should also include any documentation, such as invoices, to back up the purchase.
4. Submit for approvals
Once the expense report has been created, it then has to be submitted to the appropriate individuals in the company for review and approval.
The individuals who should review and approve the expense report will vary depending on the company’s policies, but it could include the individual’s supervisor, the accounting department, or the executive team.
5. Review and approval
The individual who is reviewing and approving the expense report will review the report to ensure that all of the information is accurate and that the expense is necessary to the business.
6. Reimbursement
After the expense report has been approved, the employee will be reimbursed for the expense. This could be done by either direct deposit into the employee’s bank account, or by issuing a check to the employee.
The employee should keep all documentation associated with the reimbursement in case it is needed for auditing later on.
Check out article on employee expense reimbursement policy to get a complete idea on the set of guidelines and rules to follow when creating a reimbursement policy.
7. Auditing and reporting
This step involves a review of the expense report and all associated documentation to ensure that all of the information is accurate and complete.
Auditing and reporting are important for ensuring that the company is compliant with all relevant laws and regulations.
Additionally, this step provides insight into the company’s spending and can be used to make informed decisions about future expenses.
Expense management automation benefits for the management team
Real-time visibility into expenses
Automated expense management tools provide information on where the business's money is being spent and the irregularities.
This helps the management to take quick corrective action and ensure that expenses are within the budget.
Enhanced fraud protection
Automation can help detect and alert management on cases such as duplicate entries, incorrect payments, and unauthorized expenses, all of which could be indications of fraud.
By detecting such threats early automation tools can prevent future harm.
Increased operational efficiency
Automation reduces manual data entry and processing time, thus improving operational efficiency.
This also helps to reduce costs and improve profitability.
Fewer expense-related errors
By automating expense management system, businesses can drastically reduce the amount of manual entry and risk of processing errors, thus providing accurate and timely reporting.
With an efficient expense management system it will be easy to preemptively identify any discrepancies in the company expenses and prevent financial losses.
Improves policy compliance
Automated compliance checks and policy enforcement ensures that all expenses are following the business's policies, helping to reduce compliance-related risks.
Expense management automation software also comes with approval workflow features to help management further bolster policy compliance.
Improved control over spending
Automated expense management systems enable businesses to set and enforce spending limits and policies through the help of spend limit control and policy enforcement features.
This helps to ensure that expenses are within budget and that any irregularities are identified quickly.
Improved decision-making
Automation provides data-driven insights which can help finance teams make better decisions.
This helps to ensure that the business is making strategic investments that are aligned with its goals and objectives.
Easier reimbursement process
Automation makes it easier to process employee reimbursements, as all expenses are tracked in real time.
This helps to ensure that employees are reimbursed quickly and accurately.
Eliminates paper records and spreadsheets
Automation eliminates the need for paper records and spreadsheets, which can be easily lost or misplaced.
This simplifies expense tracking and reporting.
Expense management automation to reduce cost and improve profitability
Expense management automation benefits for employees
Increased efficiency
Automating the expense management system eliminates manual data entry and streamlines the expense-tracking process.
This makes it easier for employees to record, track and manage their expenses, saving them a significant amount of time as well as energy.
Improved visibility
Expense management systems that are automated provide employees with better visibility into their spending, allowing them to keep track of business expenses in real-time.
This helps them when spending on the job, employees can better manage their budgets and ensure that there is no overspending.
Improved security
Expense management automation software can be easily integrated with other business systems, such as payroll or accounting software.
This means that all your company’s financial data can be safely stored in a single secure system. This significantly minimizes the risk of financial data being lost or misused.
Accurate records
Automated expense management systems ensure that all expense records are accurate and up to date.
This eliminates the possibility of discrepancies or errors, as well as the need to manually reconcile accounts.
Easier reporting
By automating the expense management system businesses can generate expense reports much more quickly and accurately.
This makes it easier for employees to track their business expenses and ensures that expense reports are ready for submission promptly.
Reduced costs
Automated expense management tools can help reduce the amount of time and money that businesses need to spend on the manual processing of expenses, meaning that businesses can save money in the long run.
How to implement expense management automation in your organization?
Follow the steps mentioned below to successfully implement automation for the expense management process in your organization.
1. Assess the current expense management process
Assessing the current expense management process is the first step in implementing expense management automation in a business organization.
This involves examining the current systems, processes, and procedures for managing expenses, including any manual processes and systems used for recording, tracking, approving, and reimbursing expenses.
This assessment should include areas such as the types of expenses that are incurred, the processes for approving them, and the frequency with which expenses are recorded and tracked. It should also include an assessment of the current systems and processes used for reimbursement and auditing.
2. Identify areas for improvement
Once the current expense management system has been assessed, the next step is to identify areas of improvement. This may include looking at ways to streamline processes, improve accuracy and reduce manual labor.
It may also involve looking at ways to reduce costs associated with the expense management process.
3. Choose the right expense management automation tool
After areas of improvement have been identified, the next step is to choose the right expense management automation tool. There are a variety of tools available, ranging from cloud-based solutions to more complex enterprise software solutions.
The right tool should be chosen based on the specific needs of the business, the size of the organization, budget considerations, and the desired features.
4. Train employees on how to use the tool efficiently
Once you have selected and been onboarded with the appropriate automated expense management tool, it is important to train employees on how to use the tool efficiently. This may involve having employees attend training sessions or providing online tutorials.
It is also important to ensure that all employees are familiar with the features of the tool and understand how to use the system to its fullest extent.
5. Roll out the implementation in phases
Having completed the employee training process, the next step is to roll out the implementation in phases.
This allows the organization to gradually transition from manual expense management processes to automated ones. Doing so gives businesses the required room for any necessary adjustments to be made to the tool or the processes as needed.
6. Monitor and evaluate the effectiveness of the implementation
The final step in implementing automated expense management tools is to monitor and evaluate the effectiveness of the implementation.
This involves tracking the accuracy and efficiency of the expense management process and assessing whether the new tool is meeting the organization's needs.
It is important to regularly review the system and processes to ensure they are operating as expected and address any issues that may arise.
Easily automate your expense management process
How to accelerate the adoption of expense automation in your organization?
Properly communicate the benefits to your employees
Communicating the benefits of expense management automation software to employees is an important step in accelerating its adoption. This should include how it streamlines the workflow and reduces the manual effort required to manage expenses.
Employees should also be made aware of the added security and improved accuracy that an automated system provides.
Address employee concerns and their resistance to change
Addressing employee concerns and resistance to change should involve listening to their fears and understanding their preferences.
It is important to assure that the new system will be easy to use and understand. This could involve providing demos and presentations to demonstrate the usability of the tool.
In addition, allowing employees to provide feedback and suggestions during the transition can help to build trust and acceptance.
Provide ongoing support and training
Ensuring ongoing support and training is also essential for the successful adoption of the expense automation tool. This should include providing detailed instructions and resources to help employees understand the tool and how to use it effectively.
Regular check-ins and updates can also help ensure that employees remain up-to-date and take advantage of any new features or updates.
Reward employees who use the tool effectively
You can also boost expense automation adoption by rewarding employees who successfully use the tool. This could involve offering incentives such as additional time off or gift cards.
Recognizing employees who demonstrate effective use of the tool can also serve as a motivational factor for others to follow suit.
Reap the full benefits of expense management automation with Volopay
Volopay is a powerful expense management automation platform that helps businesses streamline their expense tracking and reimbursement processes.
With Volopay, businesses can be more efficient and organized as the software automates the entire expense management process, from expense creation to reimbursement and even accounting. It also offers powerful features such as real-time budget tracking, automated audit trails, expense management cards as well as automated approvals.
Additionally, businesses can monitor spending and create custom reports to gain better insights into their spending habits.
Volopay also integrates with major cloud-based accounting systems, making it easy to sync financial data across multiple platforms.
With Volopay, businesses can reap the full benefits of expense management automation and gain control over their finances.