2020 has completely changed our way of working. Unparalleled restrictions on travel, physical interactions, and changes in consumer behaviour due to the pandemic have forced companies to alter the way they operate in order to survive. Similarly, with a majority of employees now working remotely, companies have been forced to reimagine policies that previously would have been more blanket in nature, especially those where costs are involved.
We also know that the pandemic has accelerated digital transformation programmes. McKinsey and Company recently reported that 85% of businesses have accelerated the implementation of technologies that digitally enable key employee processes. For some, this has been presented in the form of collaboration opportunities via videoconferencing tools and software that allows teams to continue being their creative selves. Whilst for others, it has been digitisation in internal and supply chain processes, and eliminating processes that are creating additional pressures.
One pressure is expenses management, perhaps one of the last things you’d think you’d need to deal with in this time of crisis. But, with enforced working from home likely to continue for the foreseeable future, an expense management system could be just the key to maintaining control, when all control seems to be lost.
“A reduction in overall travel, doesn’t mean there’s been a reduction in expenses.”
While corporate travel has obviously reduced during the pandemic, less travelling hasn’t meant fewer expenses. If anything, navigating the complexities around home office setups and technology that employees now require, has presented new challenges to finance departments in what can count as a claim or not.
Alongside this, it has become increasingly important to keep employees motivated and productive, rather than focusing their already depleted energy on outdated time-consuming and frustrating processes. Which is why opting into automated and efficient software for expense management can be an easy to implement solution that will benefit companies and employees at the same time.
How an expense management system can benefit your business
Managing your employees’ expenses can be complicated, time-intensive and a major hassle for your finance department at the best of times, let alone in a global crisis. In a survey carried out by Center, “tracking down receipts and expense reports” was the top-ranked activity for 46% of finance professionals in 2019. This year, only 19% of finance professionals surveyed cited their current expense management processes as “smooth sailing,” down from 26% in 2019. Perhaps due to the fact that 40% of finance teams still use spreadsheets as their primary means of expense management.
Prone to errors, spreadsheets and paper-based processes are significantly less efficient than automated expense management platforms and often cause delays to month-end close. But don’t think that having an automated expenses system only offers value to finance teams. Over the course of the pandemic, there have been a number of other ways that having an expense management system has benefited both businesses and employees.
Top benefits of having an expense management system
1. Better employee wellbeing
Although the exact statistical impact of Covid-19 on mental health is unknown, it is safe to say that the lines between personal life and work life have blurred. Childcare challenges, overall anxiety levels rising, a lack of social interaction and worries over job security have meant that your employees are extremely stressed and under a lot of pressure. In times of crisis adding additional pressures by having systems that cannot cope with remote working can have a negative impact on employee wellbeing and productivity.
Imagine having an outdated paper-based expenses system that requires submission of paper receipts? Employees can be presented with a huge challenge on how to get expense receipts to their line managers, as well as keeping track of physical documents. Believe it or not, there are stories of employees having to drive over an hour just to submit one expense claim.
Paper-based systems or those working off a spreadsheet can also impact the levels of communication within an organisation, and there can be confusion on whether expenses have been submitted, approved or signed off. There can be challenges on how expenses get signed off when your workforce is remote. A line manager could be ill and fail to approve expenses in time, which can have an adverse effect on an employee’s financial wellbeing.
An automated expense management system can solve all of these issues as it allows expenses to be submitted and reimbursed quickly and efficiently, eliminating any manual processing. This means that finance teams can process requests quickly (even if a line manager is unwell) and employees won’t be out of pocket – or think that they’re a credit line for the company.
2. Expenses policies can be amended, swiftly
The biggest challenge when the pandemic first hit was that there was very little transition period. Many countries imposed lockdowns almost instantly, whilst others started by limiting travel to affected destinations. Imagine the situation where you’re abroad for work and potentially stranded. Could you have just expensed a new flight home? Would it have been reimbursed no questions asked?
Having a dynamic expenses policy at the centre of your expense management process means being able to react to emergency situations without losing control of spend. As a business, you want to reassure employees that you will do “whatever it takes” to keep them safe whilst being able to instantly assess the cost of such exercises.
Swift changes to policies might involve allowing expenses to be claimed for items not typically approved, such as disinfectant wipes, face masks or gloves for travellers. Staff who have been forced to work from home may need to buy equipment and technology for home to ensure a productive office environment.
An automated system can enable quick repayment of such expenses for unexpected items employees have had to purchase, whilst providing finance with real-time visibility of all costs so that they can be associated with the emergency measures. An outdated policy or expense management process wouldn’t allow such flexibility and can have a detrimental effect, not only on the business, but also the trust between you and your employees.
3. A more productive and engaged workforce
Paper-based expense management is extremely impractical in the modern world of business. It can put immense strain on finance teams to keep track of physical receipts and chase employees to submit expenses, and then process and reimburse them accordingly.
Quite frankly, expenses were not at the top of an employee’s list of things to do pre-pandemic, and with a poorly designed system, they won’t be post-pandemic. You may even find you come out of quarantine with a stack load to be submitted because the expense management system couldn’t be easily accessed remotely. Imagine being a manager in this crisis having to work out whether to approve expenses on paper or outdated systems that require actual signatures. Your team has enough to worry about without thinking that the expenses they’ve incurred may take an age to be reimbursed.
By digitising the process, you get happier, empowered employees and a more efficient approval process, freeing up managers to work on more directly profitable tasks. In addition, the systems that scan receipts using OCR technology and that import corporate or personal card transactions directly into the system speed up submissions and in turn, reimbursement.
Going one step further and embracing a SaaS model for expenses management that’s integrated with your CRM, can also have a significant effect on employee productivity. It may seem like an unnatural pairing but over 80% of an organisation’s expenses are incurred by commercial teams – those in sales, marketing and customer success. These same commercial teams live in your company’s CRM continually updating revenue information whether generated or forecast. So not only does it mean they can claim and process expenses in the same system, it also means all expense data sits alongside sales opportunity, customer account, marketing campaign and client project data. It gives finance insight into the ROI of all spend and crucially, what your company is paying out – and why.
And, the bonus is that your staff won’t get bogged down with the inefficiencies.
4. Preventing business fraud
In a recent report, it was found that expense reimbursement fraud costs the average company $40,000 per year. A paper-based system may have traditionally looked for a paper trail, but in a remote working environment where it can be hard to keep track of receipts and submissions, your company is vulnerable to fraud, intentional or otherwise. Just check out some of these examples of expenses that confound common sense.
Using an automated system, especially when people are working remotely can help minimise fraud and prevent submissions of the same expense more than once. It can empower finance teams to keep track of submissions and follow up on any that haven’t been submitted correctly or those that may seem slightly questionable.
By simplifying the process, an automated expense management system can support in enforcing expenses policies and make submissions and reimbursements a very transparent process.
5. It helps business stability
‘Pivot’ and ‘unprecedented’ have become the buzz words for this year. And, in trying times, a key concern for businesses is to manage cash flow. Poor cashflow can result in slowing down of payments to employees, as well as heightening insecurities about the future of the company.
A digital expense management system gives much greater visibility to organisations. You can see where revenue is incoming, what expenditure is outgoing and filter results down into each area of the business, without having to trawl through paperwork.
A CFO, who has taken forecasts and projections into account, could end up facing a significant challenge if a lump of unexpected expense submissions turn up that they knew nothing about. A backlog of claims can have a huge impact on how businesses set a strategic long-term vision in place to survive the pandemic. If your business is stuck with its outdated expense methods through this crisis, it could be a nail in the coffin of your business continuing to trade.
Slow payment to employees might help cashflow initially, but what happens if you come out of this and the business is hit with a massive amount of backlog of claims which were previously unaccounted for? A transparent, efficient and reliable system would prevent this happening and in turn offer business stability when you need it most.
Post-pandemic benefits of expense management
While a digitised expense management process can be extremely effective when there is a global crisis, there is also a post-pandemic benefit to be realised. Once borders start to reopen and events start to happen again, your companies will begin to send your employees on business trips, corporate events and trade fairs, and the backlog of travel expenses and booking payments will return.
With a high volume of travel expected, getting your processes digitised now will save a costly transition period in the future, allowing you to establish a strategic long-term plan for your business and your employees.