An expense management software is a tool that helps organizations keep track of their spending. It provides insight into where money is being spent and can help to identify areas where cost savings can be made. By tracking your spending, you can see exactly where your money is going and make changes accordingly. This can help you stick to your budget and avoid overspending. Having an expense management software can also help you keep track of your receipts and invoices, which can be very helpful in filing tax returns.
While larger companies have typically replaced paper reports, stacks of receipts, and spreadsheets with expense management software, smaller organizations tend to hold inefficient manual processes and systems. This can have serious implications: Small businesses that do not have expense management software run the risk of their employees purchasing something that is not allowed, as well as frustration with time-consuming processes and reimbursement delays.
They may face cash flow issues if duplicate or bogus reports enter the system, they are unable to bill for expenditure on behalf of a client in a timely manner, and unintentionally mistakes result in tax penalties.
Here are five reasons why expense management software can be extremely beneficial to your team and business.
Faster And Simpler Than Before
Previously, submitting expenses required printing paper copies, attaching receipts, and passing reports to managers, who would then either approve or return them to the employee for adjustment. The workflow, on the other hand, is automated with expense management software.
The report is automatically transferred to the appropriate person for approval once the employee clicks “submit.” After approval, the reimbursement amount can be automatically submitted to payroll. If the manager who is in charge of approving or rejecting employee reports is absent, the report may be routed to a temporary approver.
Fewer Delays And Errors
Expense management software improves accuracy and speeds up employee reimbursements.
Employees, for example, may make data-entry errors when manually processing expenses. Data from bank accounts and credit card transactions can be directly imported into expense management software. It can also detect errors and duplicate entries, as well as notify you when a report or payment is late.
Enhanced Fraud Protection
According to the Federal Trade Commission, 4.8 million fraud reports and identity theft cases were submitted to them in 2020. It is common for busy financial teams and supervisors to overlook bogus entries, even from trustworthy employees or contractors. However, it is difficult to recover that money once it has been paid.
Managers can be notified by expense management software if an amount appears to be excessive. It raises a red flag for further investigation before payment is approved and sent, reducing the number of fraud cases in businesses.
Simplified Reporting And Improved Visibility
Real-time insight into business spending is provided by reporting and analytics. You can easily aggregate all of your spending into a single report using expense management software, or you can see costs broken down by personnel, project, or category.
You can also use expense reporting software to identify high-spending employees and chronic rule violators, as well as monitor each employee’s cost patterns over time, to follow best practices for spending control. An expense management software can even assist in identifying areas where expense rules need to be clarified or more effectively enforced.
Helps in Compliance
Expense management software assists businesses in compliance with local, state, and federal tax agencies. Companies can categorize and label expenses such as office, travel, and mileage. Expense management software also provides electronically accessible copies of reports and receipts, which are extremely valuable if the company is audited.
Conclusion
Corporations’ finance departments dislike manual expense reporting because it is a time-consuming process that costs money in terms of the time required to submit, approve, and handle policy violations for expenditure reports. All of these issues are eliminated by effective expense management software, which streamlines the entire process.
