Modernizing the finance function has been an area of much focus this year. CFOs are continuing to push towards optimizing and creating efficiencies to provide strategic advantages to their organizations. One of the primary areas of change is automating expense reports. To manage cash flow we need to know what we are spending, but oftentimes we are limited due to the lack of visibility in employee spending. On average, Travel & Entertainment represents 8–12% of a company’s operating expense, but we are often dependent on excel or paper receipts and untimely reporting to receive the information. How can CFOs effectively manage or make the right decisions without the data?
Why do organizations continue to use paper-based expense reporting?
- Systems are too costly
- Excel is free and everyone knows how to use it
- Employees won’t use a system
- Back-office staff “catch,” errors
- We’re too small for a system
In reality, if your process is inefficient, your employees are spending valuable time creating, sorting, and managing paper. As accounting departments manually verify policy compliance and coding, data is keyed multiple times and organizations are struggling to manage spending. There are a number of cost effective online solutions available today with some key benefits. According to the Aberdeen Group, businesses that use an end-to-end travel and expense system see 44% better compliance to their policies.
- Reduce processing time
- Utilize workflows for expense approvals, reduce the need to “chase,” managers
- Allows employees to know status without calling accounting, slowing the process
- Automate payment notifications
- Increase ability to negotiate preferred vendor discounts with accurate data
- Reduce paperwork, errors and manual processes.
- Integration to the ERP system eliminates the need for rekeying
- Predefined coding for departments, allowed accounts and types of expenses reduce the number of errors and validates many items on input
- Employees electronically capture receipts and invoices, many will prompt if attachments are missing per defined policy
- Collect expenses automatically
- Integrate expenses from corporate cards automatically, increases timeliness and eliminates keying errors
- Some applications automatically code entries based on repetitive vendors
- Reduce “surprise,” expenses
- Mobile access
- Smartphones have made expense reporting immediate and efficient
- Companies whose employees use mobile expense reporting and travel apps save 4.5 hours a month
Modernizing expense reports will allow you reportable, near time data and a level of visibility and control in employee spending that isn’t achievable via paper based systems. Expense report systems will create savings opportunities, increase productivity and directly impact the bottom line. This is another way in which the office of the CFO can ensure that finance is aligned to the overall strategy of the organization.