5 Perks of Expense Reporting
For companies of all sizes, expense reporting is an essential procedure. It involves tracking, managing and reimbursing employee expenses. While expense reporting may seem tedious, it offers many benefits that make the effort worthwhile. Here are 5 major perks of implementing an expense reporting process:Thank you for reading this post, don't forget to subscribe!
One major benefit of expense reporting is that it provides finance teams with a comprehensive view of company spending. In most organizations, expenses get paid through various channels – corporate cards, employee reimbursements, invoices, cash, etc. Each of these transactions generates data, but that data remains fragmented.
With a proper expense reporting system, all these costs can be imported, captured and consolidated in one central digital platform. No matter how expenses were originally paid, they get documented in the expense report solution. This gives finance leaders a single source of truth for all corporate spending across the enterprise. Expenditures are no longer spread across individual employee expense claims, credit card statements, AP systems, and accounting tools. Every dollar spent gets registered and categorized appropriately.
The detailed expense data captured in a reporting system provides immense value for budgeting and forecasting efforts. With clear visibility into past spending across the company, finance leaders can spot trends and patterns. The historical expense reports shine a light on where and how the money was actually used over previous periods.
These insights allow finance to craft budgets that better reflect real spending requirements. If the marketing department consistently overspends its budget on software tools, budgets can be adjusted accordingly.
Rather than basing budgets on high-level assumptions or prior cycles, they can be grounded in where dollars are actually going based on expense reports. Similarly, forecasts become more accurate when factoring in real expense data. Predicting future costs is very difficult without understanding how much was actually spent on certain activities.
Expense reporting systems make auditing and compliance much easier for finance teams. When tax time comes, auditors may request support for expenses across specific time periods. Or they may ask for documentation of certain types of spending, like meals, travel or marketing.
With manual processes, gathering this detail is tremendously cumbersome. But expense reporting systems allow required data to be pulled out quickly for any parameter analysis. The digital format also simplifies documentation storage and access compared to paper records. Digitized receipts, invoices and other support can be attached to expense reports and retained securely. This eliminates the hassles of physical documents that can get lost,
damaged or disorganized.
Expense reporting further aids compliance by enforcing upfront categorization of spending. Employees must classify expenses to the appropriate account codes when submitting reports. This ensures costs get allocated correctly from the start rather than fixed later. Proper categorization provides finance leaders confidence that reporting follows regulations for areas like deductible/non-deductible expenses, capital purchases, sales tax and more. The right data can be extracted easily for tax filings and other compliance needs.
Expense reporting introduces greater accountability across the organization in several ways. First, the act of submitting expenses itself fosters responsibility. Employees must capture and classify all costs to generate reports. This documentation encourages more mindful spending if employees know expenses will be scrutinized.
Next, automated approval workflows add oversight before the money goes out the door. Expenses outside policy limits often require additional sign-off from managers who affirm whether the charges are justified and budgeted. This prevents unnecessary or excessive spending. Approval processes also reduce fraud since they ensure another set of eyes reviews expenses. Patterns of suspicious purchases get flagged and duplicate or doctored receipts raise red flags.
In addition, expense reporting provides an auditable trail of all spending company-wide. Every dollar can be tied back to an approver and policy. This facilitates enforcement and follow-up if violations occur. With increased visibility and oversight comes heightened individual and organizational responsibility. Employees become more prudent spenders knowing expenses have to adhere to guidelines and governance. Financial stewardship improves.
Expense reporting also speeds up and simplifies the reimbursement process for employees. With manual reimbursement, employees must submit paper expense reports, wait for someone to review them, and then wait again for claims to be reimbursed. This could take weeks, especially if errors slow things down.
Expense reporting systems automate and streamline these steps. Once an electronic report is approved, reimbursement happens instantly. Integrated payments issue a direct bank transfer of funds into the employee’s account for approved expenses. No more waiting around for a check. No more hassle of depositing the said check. Just fast, seamless reimbursement.
Direct deposit also reduces company costs by eliminating the need to cut and mail paper checks. And it prevents potential delays from checks being lost in transit. Faster reimbursement improves employee satisfaction. Out-of-pocket spending gets quickly recouped so workers aren’t floating money for the business. This maintains positive cash flow for employees.
Expense reporting promotes visibility, informs planning, eases audits, enhances accountability and speeds up reimbursement. While creating reports takes time, the long-term benefits often outweigh the effort required. Companies that embrace expense reporting position themselves for smarter fiscal management and financial success.