Expenses equals paperwork, right? Wrong! Or at least, they shouldn’t in this day and age. If your business is still using manual processing and forms for employee expense claims, expenses management and expenses reporting, you’re taking a risk with your finances and reputation. You are also taking a big hit on productivity.
Paper-based systems may have served businesses well in decades gone by, but in today’s digital world, online and app-based systems for automated expenses reporting are readily available. Compared to these efficient and user-friendly tools, paper-based systems are costly, inaccurate and consume precious employee and management time.
Let’s count the cost of lost productivity
If your employees are still suffering the burden of a paper-based expenses claim process, you’re probably familiar with their multitude of complaints.
Think about the commercial teams who are constantly on the road and often hoard receipts for as long as they can afford before making a claim. They put off the task of submitting their expenses because the process is so time-consuming and frustrating. Trying to remember and write down their travel and spending over weeks or months can mean they over- or under-claim. If they’ve lost receipts, they may end up out of pocket, which creates understandable resentment.
Manual VAT calculations are also a world of pain for employees – and the businesses they work for. They may not know which items attract VAT and which don’t. If the receipt doesn’t clearly separate the net and VAT they have to work out the correct percentages themselves.
Then it’s just the beginning for your finance team and expenses management administrator. They have to decipher and check handwritten information, verify the codes, check calculations and match every receipt to details on the claim form.
It’s no surprise that queries arise – back goes the form to the employee for correction and clarification. All this time, the employee is out of pocket and feeling unhappy about having to work so hard to reclaim their own money, spent in the legitimate course of their work.
When at last the administrator is satisfied, there’s often a two-level management sign-off process. With a paper expenses tracker form to be handed around, it can’t be checked until the manager is in the office or has picked up their post. More delay ensues. And then there’s the VAT that needs to be recovered – if the correct VAT receipt was attached.
With paper-based expenses, businesses are flying blind
All this contributes to a significant business risk in the time and complexity demanded by a paper-based expenses management system. It’s impossible for sales managers, project teams or the finance manager to keep a track on expenditure in relation to revenue. A profitable client assignment can look very different after several consultants finally hand in six months’ of accrued expenses and travel receipts. It may be too late to charge back to the client. It’s certainly too late to address overspending or to set appropriate limits that maintain ROI.
Cash flow is another problem when you can’t predict how much you owe in expenses and when the claims will come in. Even if your expenses tracker process stipulates a monthly or periodic claim, there’s no guarantee that hard-pressed employees will manage to meet the deadline. And you probably prefer them to prioritise client work in any case.
What paper expenses could do to your reputation
In a business world that’s almost entirely digitally connected, people take for granted the convenience, speed and efficiency of digital communications in every area of commerce. A paper-based expenses management system falls far short of these expectations. A primitive expenses reporting system can create a poor employee experience, potentially affecting your ability to attract and retain talent.
For your clients and partners, seeing your staff grappling with an antiquated paper-based expenses system can give the impression of an old-fashioned or under-invested organisation. This can contribute to a lack of confidence in your services and brand.
There’s also the risk of failures in compliance, both to satisfy external rules (taxation, VAT and financial disclosure) and to meet internal spending employee policies. With a cumbersome paper trail and laborious data rekeying to an overall system of record, it’s easy for expenses reporting to become inaccurate, incomplete or to fall behind. This can have serious consequences if anyone in your organisation discovers discrepancies or if an external party demands an audit or finds errors in your fiscal reporting.
Is digital expenses management really a silver bullet?
Compared to old-fashioned paper-based travel and expense management, a digital expenses management solution will almost certainly be transformative for your business. If employees can complete expenses line by line, as they incur them, using a mobile app and phone camera, they regain lost time spent filling forms. Automated expenses systems do the VAT calculations and classify spending correctly against the exact business purpose whether that be a customer meeting or internal travel to an alternative company office. They can collate spending on travel, subsistence and other items at a granular level to each trip or event.
For the expenses admin team, reviewing and checking the expenses tracker is a clear and quick process. Passing claims up the line for approval happens within the app, so managers working off-site don’t hold the process up. Employees can be reimbursed quickly, as they incur the expenses, which increases their satisfaction and trust in their employer.
With an automated travel and expenses management system, the business has real-time visibility of spend, recorded in a single platform. That means financial and project managers can forecast spending and keep track of ROI and profitability. If expenses spending veers off-plan, they can investigate the causes by reviewing the expenses tracker data and take action. That could mean adjusting policies or authorising the overspend if there’s a clear business benefit.
Now you know why you can’t afford paper-based expenses management
It’s hard to think of a single justification for retaining a paper-based expenses management system when the upsides of digital expenses management and reporting are so substantial. Making the move will save your business more than just money: productivity, financial visibility and employee satisfaction will increase, while the business risks of inaccuracy and non-compliance are minimised.
Of course, it’s important to choose your system wisely. Consider whether a fully integrated travel and expenses system would give you an even better return, by helping employees book and claim travel within a single system. Take a good look at the app and platform to make sure they’re easy and intuitive for employees and managers to use, so they’ll adopt the new expenses management system readily.
And make sure your chosen system’s reporting capability gives you the analytical capability you need. If your expenses tracker integrates with other key business systems that capture revenue and operational data, you’ll be able to generate even fuller financial and operational insights from expenses data to support your strategic decision-making.