Steps involved in Streamlining Expense Management Process
What is expense management process
An expense management process is a set of procedures that helps businesses streamline their spending. It is the sequential flow through which employees make claims for reimbursements and account for the business expenses they incur.
This systematic process ensures that the company’s spending doesn’t go unchecked and offers critical insights to cut back on costs.
When you have an expense management process that employs manual systems like spreadsheets and emails, key information is often missed. Errors become routine and expense reporting and reimbursements are a pain. You’ll need human intervention just for data to flow from one person to the next.
In addition to eating away at valuable time, this practice also dwindles an organization’s money when the hidden costs tied to paperwork are taken into account. Organizations that hesitate to embrace automation experience a higher frequency of errors, inconsistent processes, and lower employee morale than their peers who have an expense management system in place.
Here’s why you need an automated expense management system.
The need for an expense management system
Usually, employees forward receipts directly to the finance department or submit a spreadsheet along with scanned images or receipts. These traditional expense management tools are not only inefficient but also labor intensive. A dedicated expense management system can solve this problem.
An expense management system tracks and records all employee business expenses in a centralized database. It also handles all the tasks involved in the process by sending automated notifications, moving documents from one step to another with little to no human effort.
Steps involved in the corporate expense management process
Each organization will differ in how they handle the corporate expense management process, depending on the structure and policies. Given below are six logical steps of an ideal expense management process.
1. Record expenses
Employees who plan to claim reimbursement need to collect paper receipts, credit card statements, hotel bills, and other documents that show the proof of purchase.
2. Submit expense reports
Expense reports provide a comprehensive overview of the total expenses and costs incurred by the employee. An array of tools from paper forms to spreadsheets and dedicated expense management software is used to create and submit expense reports. Expense reports play a huge role in mitigating risks and preventing chances for false/excessive expense claims.
3. The approval cycle
Once an employee submits the expense claim, it is reviewed by his/her direct manager and the accounting department to ensure the authenticity of claims. The number of approvers may vary depending on the spend threshold and organizational policy.
4. Expense processing
In the case of noncompliant expenses and excessive spending, the claims will be rejected back to the employee. Qualified expense claims will be approved and forwarded to the finance team for reimbursement.
Once the expense reports are approved and credited to the organisation’s expense account, the employee reimbursement process begins. Payment methods like direct deposits, payroll cards, checks, and cash can be used for reimbursement.
Once the reimbursement process is complete, the expenses are recorded properly for accounting and auditing purposes.
The benefits of automating your expense management process
Streamlining the expense management process with workflow automation software speeds up approvals, eliminates manual errors, and eliminates the need for emails exchanged back and forth.
Workflows save time by handling tasks that are predictable and repetitive without the need for any manual intervention. The information follows a predefined path smoothly and seamlessly. Everyone stays informed, and you can easily identify where tasks are hung up.
For example, when employees report expenses incurred during business trips, all they need to do is fill out a simple form and hit submit. No spreadsheets, no emails. The managers receive the expense reports automatically. The system throws up red flags if there are expenses that violate the organization’s expense policy.
Also, using rule-based logic offers you plenty of opportunities to automate expense approvals. You can set up automatic approvals based on predefined conditions for food expenses that are less than $20, for example. The possibilities are endless.
The best way to handle the expense management process
If you’re looking for a tool to handle expense approvals, check out Kissflow Finance and Operations Cloud. You can keep track of all expenses, let your employees create expense reports, and you can approve them right from your smartphones.
Kissflow Finance and Operations Cloud is a suite of finance applications that are tailor-made for your business to automate and streamline finance processes like expense approvals, travel requests, and budget approvals. Sign up for free demo.