A client asked for a piece about expense management that gives a brief overview. I decided to use an approach that used lots of bulleted lists. Since this is intended for a landing page, the information is not detailed. Since I wrote this piece, the links do not point to the client’s page.
As your business expands into other markets, it becomes more difficult to track travel expenditures for your employees. A 2017 study concluded that businesses are spending between 6 and 12% of their annual budget on travel and entertainment.
A business with a million dollars in sales will typically spend a minimum of 50 thousand dollars annually on travel expenses. Do you have time to manage money, chasing down receipts, and making sure your employees are spending company money wisely?
If keeping track of expenses has become overwhelming, a provider can manage those expenses for you. They will efficiently track and handle those expenses so that you can devote your time to growing your business.
What Does an Expense Management Service Provide?
A system to manage expenses monitors, analyzes, and manages your expenses. Along with tracking the costs, a provider also
- Analyzes your current system for tracking expenses
- Creates systems for requesting, approving, and reimbursing expenses
- Provides analytics so you can quickly see where the money is going
Why Not Use an Accountant or Bookkeeper?
Do not think of an expense management service provider as a glorified bookkeeper or accountant. Bookkeepers and accountants are essential. However, your accountant’s primary role is to ensure that your records are accurate and lawful. A second role is to create reports that explain those numbers to clients, managers, or anyone else who needs them.
More likely than not, you started off having your bookkeeper track your travel expenses in addition to the other bookkeeping duties of tracking expenditures and income, balancing the books, and similar tasks.
Now that your company is expanding, your accountant and bookkeeper have too much on their plates to be efficient.
The Expense Management Service Will Perform A Thorough Analysis
Before a problem can be fixed, you first need to find out what the problem is. The first thing you can expect from a service is a detailed look at your expenses. Even if a company wants to focus on travel and expense management, a thorough examination of all expenses can help a company decide where to tighten the belt.
- Technology. Imagine running a business with 100 employees and not using technology? Computer equipment, software, applications, and repairs can add up quickly.
- Telecom. Communication these days is not simply passing out some phones. How much are the phones, data, VoIP, or UUC costing?
- Travel. Travel Expenses (often called T+E) are those related to employee travel, whether it be for sales, training, or conferences.
What an Expense Management Service Look for
Ask yourself the following questions:
- Are my policies comprehensive?
- Can I quickly see how much is being spent and who is spending it?
- Do I have a policy to approve travel?
- How do I know if fraud is occurring?
- Is there a process for reviewing expenses?
- Have you broken down expenses into categories and track them that way?
These are some of the areas that a service will examine. Unless you have thought all of them through and have the time to do that work, you should outsource it.
Develop Expense Management Solutions
The next step in the process is to come up with a plan. After a thorough analysis, you might decide that you want the expense management firm to take on a full-scale corporate expense management plan. You could also choose to focus on their travel and expense management services since those are the least predictable. They are also expenses more challenging to monitor.
The firm will first examine what procedures you have in place and recommend which could be kept and which could be modified or put into place. Then it will develop a plan to increase efficiency, control the expenses and avoid fraud, and make the system user-friendly.
Also, your employees will respect the policies more because you have an expense management plan in place.
No one wants to think that their employees are defrauding their company. A study by the Association of Certified Fraud Examiners found that 15 percent of fraud came through expense reimbursement.
Some employees will charge something on a company card and then ask for cash reimbursement. Others will overcharge, usually smaller amounts, to avoid being discovered. Another trick is to claim expenses not related to the business or spending more lavishly than they need to. Is flying first-class necessary?
Implement Those Solutions
Next comes implementation.
You will be glad that the service will handle the development and implementation of the system that is put in place. After all, unless your business is expense management, you have more important things to do. Paying someone who has a track record creating and implementing plans is a more efficient use of your time, wouldn’t you say?
You might decide that as part of your plan, you will go digital. One way to do that is to use an online expense management service. After all, your employees are part of the 2.71 billion people who have smartphones, and they can quickly snap a picture of a receipt and upload it.
Next, you can choose what you want the online system to do. Besides adding it into an accounting package, your service can help you develop a plan that automates the reviewing and reimbursement process.
Picking a Digital Provider
There is no shortage of online providers, so how do you pick one? We suggest you look for the following features:
- Does the program automatically manage the expenses, or will someone have to input data?
- How robust is the mobile app that comes with the system?
- What level of reporting will you receive?
- Will it enforce the policies for travel?
- How easy is the program for the employees?
Often an online system has a trial period. Utilize that period efficiently by trying it out on a smaller scale before you roll it out to the entire company.
By using a management service, you will be able to have an efficient process that will help you budget your costs. This will improve your bottom line, something every business owner likes.