Employee-initiated expenses are the second largest controllable costs after payroll. Failing to manage these expenses extend beyond the danger of economic losses. It also put businesses at risk of criminal prosecution for failing to practice effective control over this indefinable spend category. If an organization wants to remain competitive in the long haul, its corporate travel has to be controlled tightly. The major concern is to manage those spends actively but cleverly and get maximum value for the money businesses spend.
Corporate travel is perhaps the most obvious category of employee-initiated expenses, and the most subject to abuse. Advanced expense management results from creating a complete business process that generates maximum value for employee-generated spends. Automated spend management system can be the best solution for managing employee expenses, but the real task only begins with software selection.
Managing employee-initiated expenses involves more complex detail management than controlling payroll. Organizations need to track continuous stream of transactions and make sure those transactions fall within appropriate cost guidelines, draw on preferred vendors, and truly support the goals of their business. Before managing employee initiated-spend, they need to be able to measure it. A corporate spending accumulates in small, subtle transactions that approvers are often hard-pressed to examine in any meaningful way until it’s too late, if ever. And even when spends can be collected at a useful level of detail, it remains hard to track those costs in context to gain favorable volume discounts with vendors.
Automated Expense Management System
While employee-initiated spends present the maximum chances for cost savings in many organizations, the difficulty of monitoring those costs presents its own challenge. Business travel alone can involve hundreds of vendors, thousands of trips, and tens of thousands of transactions. Moreover, it’s not enough to find the best price – you need to seek the best value overall. That demands a broad approach to the entire spend management process, from vendor relationships to prior approvals through trip reporting and reimbursement. Addressing all such issues can easily become a trouble that distracts managers from their strategic responsibilities. A robust, online, highly scalable expense management system can help your business better manage corporate travel spend from anywhere, anytime.
Businesses also realize additional savings by acquiring the ability to leverage data in negotiations with vendors to cut future costs. Vendors are happy to offer preferred customer discounts to organizations that generate major business volume. They’re also more negotiable in an economic downturn when the demand to cut costs peaks. Conversely, many organizations whose business volume might give them negotiating power lack the data to make their case effectively.
If businesses have negotiated attractive prices with vendors, they need to make sure that their employees are making reservations with preferred vendors before beginning a trip or event. An all-inclusive employee expense management program ensures and enforces compliance with business travel policies so that employees take all necessary discounts at every opportunity.
To return maximum value, the expense management system needs to do more than serve as a silo for expense data. It offers a roadmap for your spend management program and helps create a hassle-free business process by giving employees and approvers as many methods as possible for making and approving accurate, timely, and complete reports.
The main task of the process begins with selecting an expense management system. Businesses need to give priority to the factors that will continue a growing process of permanent enhancement. A few things to consider are listed below.
Paperless Expense Management
The spend management system should eliminate the use of paper from the expense management process. It should offer tools to store scanned-in receipts and documentation and keep that documentation connected to the appropriate transactions. It not only saves processing time but also simplifies the process of substantiating bills and tax returns when you need them later. Moreover, the software reduces the amount of paper you need to print, store, and discard.
Corporate travel involves overseas travel to meet customers or partners and to visit trade shows. There’s no reason to let currency conversion turn into a pain when you can make that part of your original specification. You should also be ready to recover the taxes that many countries commonly assess on travelers; those funds can be hard to reclaim without proof. The expense management software should provide advanced features that support your global needs effectively.
Integrated Credit Cards
The ability to include credit card feeds and direct deposit systems means a significant reduction in processing time, more timely data, and a more satisfied workforce. Credit card feeds allow managers to view employee spend in real time and better manage risks.
Companies that manage a mobile workforce tend to be mobile themselves. There’s no good reason to tie approvers to their desks to approve expense reports. The facility to file and approve sped reports using a mobile device will save precious time for your key resources.
Each business has different needs and resources for supporting system. Some prefer to host everything themselves for security reasons. Others prefer to outsource as much IT as possible. Some firms need to blend those two approaches. The solution should support the way you need it delivered, without limiting your decision to a false choice between hosted and licensed systems. The software provider should offer the flexibility to selected dedicated hosting, subscription, or licensed solutions depending on your needs, to help you adjust to new business conditions as they arise.
Employee-initiated spends are an essential part of doing business for many organizations. By implementing an automated expense management system, business owners and managers can find a better monitor and even reduce expenses.
How do you manage employee-initiated expenses in your company? Have you implemented a good solution to minimize issues? Share in the comment section below your experience!