How Expense Management Automation Cuts Time, Saves Money & Limits Risk

How Expense Management Automation Cuts Time, Saves Money & Limits Risk

Expense management automation might not cross the mind of most employees on a regular basis, but corporate travel and entertainment (T&E) is typically a company’s second-highest cost behind labor — so, effectively managing that spending is incredibly important for the bottom line. Plus, tracking corporate spend manually is time-consuming, costly, and exposes you to fraud and compliance issues.

Traditionally, companies use manual systems like spreadsheets to record and track transactions, receipts, and employee reimbursements, while approval processes may require further communication via writing or email. Even for a small business, manual expense management systems can quickly become a headache.

Automating expense management is key to optimizing corporate spend. It saves you time and money, and reduces the risk of fraud. 

What is expense management automation?

As the phrase implies, expense management automation is the process of automating corporate spending with a software solution. In addition to just digitizing payment records and approval processes, expense management automation can also surface insights for users — allowing you to track spending over time and ultimately make smarter financial decisions going forward.

An old-school set-up might look something like this: Management allocates a budget for an employee’s business trip. The employee has to get and hold on to physical receipts for all purchases (i.e., flight, hotel, vehicle rental, gas, food, etc.). Upon return, the employee submits receipts to accounting who must compare receipts against transactions on the corporate credit card. The employee will eventually be reimbursed for any purchases deemed appropriate and within budget — sometimes not until months after the trip is over.

With the right automated expense management solution, however, most of these steps are eliminated. Budgets can be pre-approved, corporate cards can be designated for particular uses and amounts, receipts can be submitted digitally on-the-spot, and reconciliation is done automatically — all of which means employees can be reimbursed quickly and accurately.

Furthermore, corporate costs like recurring software subscriptions can also be automated to ensure that services are delivered and paid for. Automation ensures that there aren’t multiple accounts for the same services, that there are no fraudulent charges, and that when employees leave the company they are not able to control payments or subscriptions from outside the organization.

And FYI, Gartner estimates that companies spend as much as $4,800 per employee per year on SaaS applications — so we’re not talking about chump change.

What’s wrong with manual expense management?

We don’t need to tell you how important time and money are to individuals and your business — but we will tell you that manual expense reporting is wasting both. 

According to the Global Business Travel Association, the average cost to process an expense report for one employee’s one-night hotel stay is $58 and takes 20 minutes to complete. One in five of those expense reports contains mistakes or is missing information, adding another $52 and 18 minutes of work to correct the errors.

The GBTA estimates that companies process an average of 51,000 expense reports each year, which amounts to $2.65 million in processing costs and 17,000 hours in time. Factor in the errors in one of five reports, and you’re adding $562,000 and 3,000 hours to the total.

Nevertheless, in 2019, according to a Tallie survey, 43% of companies were still using manual processes for expense reporting. 

In addition to the time and money spent, manual processes also leave businesses more exposed to fraud and compliance risks. Automated systems can notify users and block suspicious charges like duplicates or overages, reduces the risk of doctored receipts, and be programmed to adhere to local regulations. 

Benefits of Expense Management Automation

If you’re still using manual expense management processes, you might be panicking. But don’t worry, now we’re going to tell you about all the ways switching to automation will improve your life (and business).

 

Cost Savings

Everyone wants to save money where they can, regardless of recent successes or downturns. According to Deloitte, “the vast majority of surveyed companies (88 percent) expect to pursue cost improvement over the next 24 months regardless of whether their revenues are increasing or decreasing.”

Expense management automation is a simple way for companies to control the purse strings and make sure that all corporate spending is meaningful and approved. Whether it’s setting budget limits on company credit cards, receiving notifications for double charges, or allocating specific accounts for specific uses (i.e., a credit card used only for a particular vendor), automation can quickly expose places where you’re needlessly wasting money.

 

Visibility

It’s hard to save money if you can’t see where you’re spending it. Expense management software easily tracks, organizes, and stores transactions and receipts so you can see where and how much money is being spent. 

Over time, business leaders can also gain valuable insights into what software services are redundant, how many accounts are actually needed for different applications (i.e. maybe customer service reps don’t need access to PhotoShop), and which subscriptions are no longer used. These insights can be extremely useful when planning and budgeting for the future.

 

Accountability

A cloud based “paper trail” means less room for error in the expense tracking and reimbursement process, and it’s made clear to the employee what is required of them. Uploading proof of purchase in real time avoids conflicts of lost or doctored receipts later down the line, while quick and accurate reimbursement ensures that employees know they are valued by the company. 

Automation also ensures reliability when it comes to reconciling expenses, so that firm expense policies can be put in place and enforced to ensure compliance.

When combined, cost savings, visibility, and accountability ensure efficiency, fewer errors, and less risk of fraud. Simply put, automated expense management makes life easier for everyone.

 

If your company is ready to explore the switch to automated spend management, set up a demo with a Mesh Payments rep today. 

Take Control of Your Spend
Manage Your Payments With Full Control & Visibility