Top 5 Expense Management Challenges
When it comes to managing expenses, medium and small businesses are at huge disadvantage compared to large enterprises. Not only employees are frustrated because they don’t get reimbursed quickly but also the management lack visibility into the nature of spending.
Without further ado, let’s get straight to the point and explore the challenges CFOs as well as employees at small and medium businesses face when dealing with expenses.
Lost receipts are just a pointless waste of time
Lost receipts are a massive pain for CFOs and for employees alike. On one hand, the employee will spend valuable time looking for them. At the end he will have to write a silly justification or worst give up on submitting his expense report. On the other hand the CFO will question the accuracy of the report and may require additional explanations. In short, it is just a pointless waste of time.
Asking employees to use their mobile phones to take a picture of their receipts shortly after they get them can resolve this issue and save the organization valuable time.
Reports that arrive months late
Just imagine the surprise of a manager when an employee sends an expense report she was supposed to submit 6 months ago. Imagine the headache it generates to do all the accounting.
To make matters worse, sometimes, the company charges back its clients for such expenses. Sure, the customer will not appreciate an invoice for a work that has been completed months ago and the company will find it hard to justify such delay.
An easy to use expense management system can help with this problem. Employees will be less inclined to procrastinate when it comes to filling out and submitting their expense reports.
Why are we spending that much
It’s very hard to optimize spending if you are not able to see exactly how and where the money was spent. SMEs tend to allocate a fix budget for travel and business expenses without measuring the ROI of such expenditure.
A good expense management software can help you better track expenses and identify potential savings. For instance, you can find out a large percentage of your budget is spent on luxury hotels. Asking your workforce to book 3 or 4 stars hotels instead of 5 stars one may easily save you a large chunk of money. In a nutshell, a better insight into you expenses can help you cooperate with employees to save money and even negotiate better terms with you vendors.
Spreadsheets can’t replace a good expense management system
Most CFOs will build a spreadsheet to help them manage the organization expenses. Such solution may work in a small company with a few employees and a limited number of expenses. But once the organization reaches a certain size, using spreadsheets starts to feel inefficient and tedious. First, it requires a lot of manual data entry, which is very prone to errors. Second, not everyone in the company is good with spreadsheets.
Investing in a good expense management solution does not only simplify expense reporting for your employees, it also enables you to analyze how you spend your expense budget.