March 1st, 2019 • Expense Management
Expense Reimbursement is one of those financial processes that every company has to handle but always seems way too much like busy work. Employees dislike it because they don’t want to be filling out forms, particularly when they’re just back from a business trip.
The finance team spends too much time on verifying data, processing claims, approving them, and paying the employee back. It’s something businesses need to take control over as it can lead to increased expenses when left unchecked, and everyone would be happy if it moved a lot faster.
Expense reimbursement is the way businesses pay back their employees who have spent their own money on business-related expenses. While reimbursements for business travel is quite common, employees can also be reimbursed for education, healthcare, and other expenses incurred on behalf of the organization.
These are three types of reimbursements that are common in most organizations:
Businesses deal with travel reimbursements when employees start making business trips. They can anticipate some expenses like air tickets and accommodation and book them beforehand.
But, there are a few expenses like cabs and meals that can only be paid during the trip. Even though businesses usually provide a per diem allowance for such expenses, employees end up incurring some of these incidental expenses.
In the case of a business meeting or an event in the same city, it’s easier for employees to use their personal vehicles rather than getting the organization to arrange transport for them. In such cases, the employees can claim mileage reimbursements for the money they spend on gas.
Sometimes, employees pay for office supplies, a meal with a business partner, or a training program that helps them do their jobs better. These are technically business expenses and eligible for reimbursement.
These reimbursements are usually not considered wages and so they are non-taxable for the employee.
Businesses offer employee benefits like Health Reimbursement Account (HRA) and Flexible Spending Account (FSA) which are essentially medical reimbursements. These are often employer-funded, tax-advantaged benefit plans that let businesses reimburse their employees for money they spend on treatment, health premiums, and other qualified medical expenses.
Workflow automation, of course!
While a dedicated expense reimbursement system seems the most obvious choice, there’s no one-size-fits-all solution. You need an expense reimbursement app that lets you completely customize the process based on your unique business requirements; a system that accommodates and enforces your expense policies.
With an off-the-shelf solution, you have to work around the existing structure to accommodate your workflows. That defeats the very purpose of paying top money for a dedicated employee reimbursement system.
Both employees and employers can benefit from reimbursements. Apart from the obvious tax benefits, there are several intangible benefits for both parties.
Paying for an educational course for employees encourages them to develop skills that can greatly benefit your business. Healthcare reimbursements show that you care about them. It increases loyalty and improves retention.
Keeping track of reimbursements also helps you control expenditures. You can identify areas where employees are spending unnecessarily and make insightful decisions that help you cut down on costs.
If you’re looking to take control over expense reimbursements, then look no further. Take Kissflow Finance for a test drive and see how fast your approvals get. Kissflow Finance is a finance process automation tool that helps you streamline key finance processes like expense reimbursements and CapEx requests. Sign up for free demo.