As your business continues to grow, the likelihood that an employee will need to use company funds to make a purchase increases. The process in which your business handles these situations is know as expense management. Let’s take a closer look at what expense management is.
What is expense management?
Expense management is the process deployed by a business to track, pay, and audit employee-initiated expenses. The expense management process encompasses two scenarios. First, an employee pays for a business related expense with a company credit card or on a business account that is pre-established with a vendor. These situations are generally easy to manage and do not require employee reimbursement. In the other instance, an employee pays for a business expense with their own personal funds and requests to be reimbursed by the company. The second scenario is where many companies run into trouble. There are many different ways that businesses can handle these expenses, but accurately tracking employee expenses is critical to the financial health of any organization.
Types of employee reimbursements
There are many instances where employees would need to make a purchase that is considered a business related expense. Some examples include:
- Cell phones
- Office supplies
- Wellness stipends
Creating an expense management policy
No matter the amount of employee expenses that your business needs to manage, it is important to track and pay these expenses accurately and timely. The first step to managing expenses successfully would be to write an expense policy for your business. Topics to cover in your expense policy should include:
- What expenses employees can be reimbursed for
- What items employees can not be reimbursed for
- Steps employees should take to get reimbursed
- Documentation required to be reimbursed
- How will employees be reimbursed
- How long it will take for employees to receive their reimbursement
Next, make sure to follow the steps of your expense policy for all employee expenses. Being lenient on your policies can result in inaccurate or missed reimbursements, having a financial impact on your business.
Automating the process
The easiest way to deploy a successful expense management program for your business is by using an expense software. Using an automated software for submitting, tracking, and approving expenses is extremely beneficial for any size business. The main benefit of an integrated expense software, such as the isolved Expense Management tool, is that it seamlessly flows into the accounting and payroll processes. Once an expense has been approved, it is automatically inputted into payroll, so employees are reimbursed in a more accurately and timely manner. This integration produces two positive outcomes. First, this faster reimbursement process will boost employee morale and help foster higher employee retainment. Secondly, manual data entry errors in payroll or accounting will be eliminated.
Furthermore, your staff’s administrative burden will be reduced with an expense software. There would be no need for manually tracking receipts and reimbursements. Employees can submit their own expenses and upload corresponding receipts. Then, managers can easily approve or deny expenses from anywhere on their mobile device at their convenience.
Automated software also enhances your policy and security compliance. Your expense process can be configured to require specific information, receipts, or supporting documentation that your policy outlines. This allows your staff more time to spend on other tasks and not wasting time tracking down pertinent information. Data security can be improved with digital receipts and role based access. Continuous compliance is provided with an automated process as all historical information is kept together for internal or external audits.
Finally, an expense software can increase your business’ financial health. Accurately tracking and paying expense reimbursements through a software provides businesses with a tool to stay within budget, reduce expense duplication, and minimize employee fraud.