The cost of conducting business must be monitored at all times, and budgetary control is a key part of this. Employees need to file expense reports in order to get compensated for their own personal out-of-pocket costs. Managers must authorize all travel and entertainment expenses, monitor the company’s total T&E budget, and maintain detailed records to support the company’s tax deduction claims.
In larger organizations, expense management software has successfully replaced paper reports, piles of receipts, and spreadsheets. However, in smaller organizations, inefficient manual processes and techniques are more likely to persist. The consequences of this might be devastating: Without expense software, employees of a small business run the risk of making unapproved purchases and may get dissatisfied with the company’s slow payment practices. Negative effects on cash flow may occur if the system allows duplicate or fraudulent reports to be processed, if bills for expenses incurred on behalf of customers are not sent out in a timely way, or if unintentional mistakes result in tax penalties and operating expenses.
Explain the Value of Expense Tracking Software.
Businesses may benefit from automated software for expense reporting in five key ways that can streamline their travel and entertainment (T&E) operations, increase productivity, and improve profitability.
When workers input expenditure reports and supporting documentation straight into the program using personal computers, tablets, or cellphones, they no longer need to fill out paper forms and preserve sales slips. Photos or digital images of receipts might count as this documentation. Employees no longer have to wait as long for their reimbursements, and the stress that comes with doing so has been reduced.
It is expected that the number of people working from home will rise at organizations that give the option, as companies increasingly have geographically distributed workforces and new and enhanced communication technologies improve the experience of working on remote teams.
Consequently, companies want a reliable system via which employees may record their expenses and be paid at any time, whether they are at home or travelling for work.
Expense management that is handled by hand instead of via a computerized system
All members of the financial department may reap the benefits.
Mastercard found that after salary, the cost of travel and entertainment is the largest indirect expenditure for most businesses. Up to 23% of the entire cost of the program may be attributable to accounting tasks such expenditure processing, auditing, compliance, and administration. Efforts to increase productivity while decreasing costs are the dominant current trend in financial management.
Conclusion
Compliance with business policies may be monitored, expense reports can be approved more quickly (or even automatically) and legitimate mistakes and fraudulent behavior can be uncovered with the help of personal rules. A study by the Association of Certified Fraud Examiners found that 11% of fraud in organizations with more than 100 employees originated in misappropriated funds discovered via audits of expense reports. Dishonest employees may steal from their employers in a number of ways, including by filing duplicate or fake claims.
