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5 Reasons to Invest in Expense Management Software

5 Reasons to Invest in Expense Management Software

Expense management is the process used to control employee-initiated expenses – from purchase and repayment to reporting and taxes. This includes both employees making purchases and administrators overseeing company spend. It entails the accurate tracking, claim submission, policy compliance (including tax deductions and ensuring maximum reclaim for companies), approval, and reimbursement of business expenses. ‘Business expenses’ refer to any employee-initiated spend for business-related purchases, including travel, entertainment, and everyday petty cash.

However, the process of claiming expenses is an age-old employee and finance gripe; these processes are often paper-based, inefficient, and run the risk of receipt loss or damage. If not entirely paper-based, expenses processes are managed through admin-heavy, error-prone spread sheets. It’s hardly surprising, therefore, that today many employers are turning to expense management software to save time, streamline administration and improve compliance.

Here are five key reasons why it’s worth investing in employee expenses software:

  1. Eliminates manual, paper-based processes (and saves trees!)

Despite the increasingly digital world in which we now live, expense management remains one area of business administration in which manual paper and spreadsheet-based processes are used. In some cases, employees are required to print, manually fill out, and request sign-off on an expense form with attached receipts, to then scan and print out a signed version for submission to the accounts team. If not done through paper-based systems, employee expenses are managed through clunky, error-prone spread sheets.

Not only are these processes laborious and error-prone, they can also cause delays in the expense claiming process. What happens in a remote set-up when an employee may not have access to a printer or the necessary spread sheets? What happens when the manager overseeing the expense process isn’t available to sign expenses documents? There’s also the risk that the physical receipt will go missing if not securely attached to a claim. In an increasingly remote and hybrid world, clunky expenses processes such as this are even more problematic.

Employee expenses software with an accompanying expense-claiming app makes it easy for employees to claim expenses. This way, employees can upload expenses by snapping a picture of their receipt through the app – using OCR (Optical Character Recognition) – and easily create a claim in seconds. This means admins can review, approve, reject, and track expense reports via desktop or mobile. Goodbye missing or illegible receipts!

  1. Increases financial transparency and cash flow management

At a high level, an accurate and detailed level of financial awareness is needed to run a business effectively. This includes knowing employee-initiated expenses and how much these account for an organisation’s overall outgoing costs.

When it comes to allocating budgets, knowing how much employees are spending on items such as travel, client entertainment and mobile phone use will enable finance leaders to determine high- spend areas in which they could be more cost-efficient, and which areas of spend are delivering return on investment (ROI).

  1. Improves the employee experience (EX) and employee morale

The employee experience (EX) is increasingly gaining recognition as a factor closely linked with business success. Research[1] shows enterprises with a top-quartile EX, versus a bottom-quartile one, achieve twice the innovation, double the customer satisfaction and 25% higher profits.

Slow, time consuming technology processes are known to contribute towards a poor EX, and delays in reclaiming expenses have a negative impact on employee morale.

Being able to lodge an expense claim in a matter of seconds not only drastically improves the EX, it also supports improved visibility of cashflow through speeded up processes – allowing organisations to reconcile these costs more quickly. This superior user experience has benefits for those approving the expense claims, too. Using the dedicated ELMO Expenses app, admins can review, approve, reject, and track expense reports via desktop or mobile.

  1. Tax compliance and optimisation

Employee expenses may have tax implications, either for the the business and/or employee, so it’s critical these are accurately recorded.

For example, most employee expenses are tax deductible, while some incur Fringe Benefit Tax (FBT), so it’s beneficial for a business to track and claim these since it means they can recoup maximum costs. Utilising expense management software will streamline the tax deduction process, automating the appropriate tax calculations so that finance managers don’t have to.

When it comes to compliance, the challenge (particularly for SMBs) is how to ensure that accurate records of expense costs are stored, managed, and maintained. Having accurate records of this nature will assist with correct reporting to the statutory authorities and mitigate the risk of an audit.

ELMO Expenses offers tools that are particularly helpful when it comes to dealing with the ATO and Payroll Tax agencies in Australia and Inland Revenue in New Zealand. The software includes an integrated reporting tool that allows data to be easily accessed and manipulated. Information that would take hours or days to put together using a traditional approach can be created in minutes through cloud-based software, while being able to provide tax authorities with full, accurate and detailed records of reimbursement and fringe benefit costs helps to allay any concerns on their part.

  1. Improves reporting

Finance teams, particularly CFOs, require accurate financial reporting.

Accurate business reporting not only helps certain businesses to remain compliant, it also provides a clear understanding of how a business is doing, while reporting data can inform important business decisions. For example, does the business have enough money to expand? What are its future opportunities for growth?

Financial reports help not only with paying the current bills, but also with helping businesses to look ahead to determine expense-related trends and patterns in their company. Having full visibility of employee-initiated expenses also helps to reduce the risk of employee expense abuse, such as claims duplication, over-claiming, or making claims for personal expenses.

ELMO Expenses provides integrated reporting features which allows a finance professional to instantly access a wealth of accurate information on every aspect of an expense operation. It provides a powerful to help meet tight reporting deadlines and track performance.

ELMO Software offers people, process and pay solutions in an all-in-one cloud-based platform. This includes recruitment, learning, performance management, payroll, expenses, and more. ELMO has helped thousands of organisations across Australia, New Zealand and the UK better manage, engage and inspire their people. For further information, contact us.

[1] MIT research cited in Forbes, “Concerned About Your Bottom Line? Focus on Employee Experience”, 2019