The last decade has seen radical boosts in the efficiency and simplicity of workplace tasks. Technologies like cloud storage and online collaboration empower teams to work quickly and conveniently, and with minimal compliance and hassle.
And yet, most businesses’ expense management processes are still stuck in the 19th Century. Storing paper receipts, stacking reimbursement forms for managers and finance to review and approve, waiting four to eight weeks for reimbursement: it’s all a huge drag.
Why don’t we demand the same speed and convenience when managing business expenses? Why do we continue to put up with these outdated, time-consuming processes?
In this post, we’ll show you how your expense management processes are broken - even if you don’t know it. We’ll show you how you can solve this problem with smart, responsive tools, saving time for your team and freeing you up to do better things.
Classic systems: clunky, slow, generally hated
Traditionally, companies have relied on finance systems to coordinate business expenses. With such systems, employees pay for expenses and submit claims to managers with supporting documentation. Once approved, reports then go to a finance team for processing and payment, usually in the next pay cycle.
[Note: "System" here doesn't necessarily mean anything formal. In fact, a lot of businesses don't have a serious company spending policy or process in place. And even if they do, not everyone knows what it is or how it works.]
Smaller, more nimble startups might have more agility when making business purchases, and can avoid these slow, lumbering processes. But as soon as a business hires a finance team, expense authorisation and monitoring tends to become centralised.
It’s easy to see why people think of this sort of system as the default way to manage expenses. Tasking a finance team to handle expense claims does ensure a degree of consistency and standardised oversight. When combined with a good expense policy, a centralised system can also lower the risk of expense fraud.
As commonplace as these processes may be, they are intolerably time-consuming and inconvenient for employees, especially managers and finance team members.
Inefficient and inconvenient
Consider this cautionary tale: Sales rep Simone is travelling for a pitch, and stops in to buy some backup presentation supplies, let’s say whiteboard markers.
By the time Simone remembers the receipt for £8.50 (she likes having all the colours), fills out an itemised expense report, submits it to her manager for approval, and makes sure it gets to finance for processing, many weeks have elapsed. When the payment finally appears in her paycheque, her claim will have travelled across a bewildering number of desks.
What’s more, Simone has had to go into her own pocket, spending her hard-earned cash on something about as uninspiring as can be imagined. It might not be a lot of money in itself, but with enough sales trips and presentations, it can add up.
We wouldn’t ask a friend or a family member to wait more than a month to be repaid after shelling out for something. Why, then, would we ask staff members to do it?
Too many people involved (and the wrong people, at that)
As we’ve seen with Simone, from purchase to reimbursement, a standard expense claim process can involve a minimum of three people at different stages:
- Simone makes the purchase and fills out the expense claim form
- Her manager reviews and approves the expense claim
- A finance team member checks the documents and processes the payment
What’s more, this doesn’t even include others in the process, for example, the executive assistant collating forms, the HR representative processing payment with payroll, or anyone else unfortunate enough to find themselves trapped in this wretched labyrinth of paper.
A process like this involves way too many manual dependencies. Not only does relying on multiple people to complete their steps slow everything down, but the paper-based process makes things even clunkier, not to mention wasting valuable time.
Think about it - where else in your business does a piece of paper have to make its way through so many inboxes and in-trays, all for such a trifling amount of money?
Having your staff spend so much time on a pointless process is bad enough; what makes it even worse is the fact that it’s probably some of your most valuable staff doing it.
Instead of wasting time on expense processes, your managers and finance people could be considering strategic trends, including new ways to better serve your customers and grow your business. Trust us - they’d definitely be happier doing that instead.
Why do we put up with this?
Recent years have seen major advances in the efficiency and convenience of personal spending technology. For example, Amazon allows for secure one-click purchasing without having to provide credit card details, making online shopping about as convenient as can be imagined (short of telepathy, anyway).
Why, then, haven’t we seen the same kind of improvements in business expense systems as we have for personal spending? After all, expense report processes are one of the things employees complain about the most. So, what’s the hold-up?
Well, two reasons:
- First, the alternatives aren’t always well understood. When people think of a way to manage business expenses, the first thing that comes to mind is the standard expense claim approach. People simply don’t know there are other options out there.
- Second, the person at the helm is usually insulated from the hassle. Expense management is usually kept a few layers below the CEO, which means the boss isn’t always aware of the problem, let alone thinking about potential solutions.
Luckily, there’s now an easy solution available: integrated expense management tools.
Integrated expense management: a smart, responsive solution
Integrated expense management tools such as Spendesk allow for expense processes to be decentralised and distributed amongst staff. This makes the process faster and easier, removing the need to have everything verified and processed by a finance team.
With an expense management software platform, a business can manage payments through prepaid expense cards customised for individual staff and payment categories. This is convenient for staff, and gives management peace of mind.
When making purchases, staff can request payment validation from a manager or finance member through using smartphone push notifications. This reduces approval time to mere seconds, and saves staff from submitting expense claims at all.
With an expense management tool, businesses can achieve the same level of oversight of employee expenses without the hassle of manual forms. Staff can also automate recurring payments, saving the time spent on processing regular payments.
An integrated expense management solution can also help companies to be ready for audit through providing smart systems to aggregate, analyse and itemise business payments.
Enhanced security and convenience
Security is often a big reason for businesses sticking with their existing expense management procedures. Having managers and finance teams receive expense forms seems secure, and deviating from the process seems risky, right? Well, not anymore.
An integrated expense management tool allows businesses to manage their expenses without sacrificing security. It does this in a few ways:
- Pre-authorised expense categories can be tagged to prepaid cards, meaning employees can only spend inside prescribed limits.
- Single-use, non-transferable virtual credit cards make online purchases simple and secure, essentially reducing the risk of business credit card fraud to zero.
- Same-time expense validation allows managers to know exactly when company funds are being spent, and why.
- An integrated expense dashboard provides for detailed point-in-time tracking and monitoring of business expenses at any time of the month, and gathers all expense tasks and steps in one place for easy viewing and attention.
- Smart technology captures and automatically sorts receipts and invoices, saving time and ensuring easier compliance and audit readiness.
These features all work together to empower staff to manage their business expenses with convenience and security, avoiding the hassle of a manual paper-based process.
Perhaps most importantly, no one has to go into their own pockets to cover business expenses. Not only does this avoid a common employee bugbear, but it also significantly reduces the risk of expense claim fraud.
Conclusion: now you know, there’s no excuse
Irritatingly slow, painfully antiquated, annoyingly complex: it’s time we all called out traditional expense management systems for the dinosaurs they are.
Think about it: there’s simply no way to justify filling out pen and paper expense claims at work and ordering pasta sauce through Amazon’s talking robot at home. It’s just silly.
If you’re a CEO, you can now empower your staff to make business purchases quickly and securely, freeing them up to do their jobs without the hassle of filling out paper and crossing their fingers for reimbursement.
If you’re not the boss (yet), be sure to tell your CEO about Spendesk. You can thank us later.