How a better employee expense reimbursement process improves spend culture — and revenue.
For far too long, employees have had to pay for business expenses up front, then wait… and wait… and sometimes wait some more to be reimbursed. At the same time, finance teams are expected to fix mistakes on expense reports, track down missing receipts, and explain complex expense reimbursement policies and procedures as a part of their day-to-day job.
This leads to frustration on both the side of the employee and the finance team.
Frustrations on the employee side: According to PYMTS.com, 40% of employees who use their own money for business expenses and then submit expenses have experienced personal cash flow issues due to delays in reimbursement processing. That makes many employees less likely to commit their own funds to invest in work-related items and activities. This frustration is felt mostly by employees who are not at management level, since managers are more likely to have corporate cards. To add to the frustration, being reimbursed typically requires completing time-consuming expense reports. And there’s always the fear that a purchase they’ve already made with their own money won’t be approved.
Frustrations on the finance team side: Stats from The Global Business Travel Association show that one in five expense reports contains an error, and it costs an average of $52 to correct just a single expense report. That cost can add up quickly. And, even with perfect employee compliance, expense reports are administratively burdensome, between tracking approvals and documentation, executing the payments, reconciling the transactions with credit card statements, and manually coding to the general ledger.
Clearly, timing is an issue with reimbursements that leads to frustration. But the impact goes even deeper. The time lag between employees spending money and their expense report being submitted and processed leads to a lack of visibility into a company’s current financial status, which can complicate budget and forecasting activities.
On a deeper level, delays in processing reimbursements creates an unnecessary division between the finance team and the employees spending money. Both are trying to do their jobs, but complicated processes, slow turnaround times, and unclear policies can — unfairly — put the finance team into an enforcement, instead of collaborative, role. Here are four ways to speed up the reimbursement process and improve morale around employee spending.
1. Make it possible to manage reimbursements on the go.
Instead of cumbersome expense reports, make it possible to submit an individual reimbursement request as it takes place, via a mobile app. When each transaction is approved and processed individually, right at the time of purchase, employees don’t have to wait until they finish a business trip to fill out an expense request that covers the entire trip. And, on the other side of the reimbursement process, making it possible to approve expense claims on the mobile app will further reduce delays.
For even more efficiency, it should be possible to delegate access to a team member for requesting reimbursement or submitting receipts, and to use Slack commands to view a list of requests in the app (since we all live on Slack these days).
2. Conquer receipt submission difficulties.
Receipts are a common roadblock for efficient expense reimbursements — they’re easy to forget, lose, or accidentally put through the laundry. A well-designed mobile app can handle the receipt requirement with ease. A photo of a paper receipt can be submitted with a reimbursement request right away via mobile app, or it can be saved to a receipt inbox to be submitted at a later date. Once receipts arrive in the receipt inbox, OCR technology scans each receipt, matches each receipt to the correct transaction record, and automatically populates the reimbursement request details in seconds.
3. Clear up confusion with automation.
Employees shouldn’t have to waste valuable time trying to decipher written expense policies, and finance teams shouldn’t have to repeatedly explain them. Rule-based policies take the emotion out of enforcement by using automation to process requests based on pre-set parameters.
With rule-based policies, complex approval chains won’t slow things down. Instead, requests are routed to one or more approvers based on pre-set approval policies tied to types of spend, departments, locations, dollar value, and more.
If a request is denied, requesters should still be able to easily access the denied request so they can edit it as needed and resubmit.
4. Route reimbursements directly to the employee’s bank account.
Eliminate extra steps and speed up reimbursements by sending approved reimbursement funds directly to an employee’s bank account, based on account information they provide. This improves visibility into the reimbursement process, since the funds are deposited separately from their paychecks. It should also be possible for employees to monitor the status of their requests.
On the finance team side, syncing an approved transaction directly with the GL keeps financial data up to date, and eliminates the manual work of coding the transaction to the GL.
How better expense reimbursement processes improve spend culture.
These changes all add up to a shift in spend culture. Employees no longer feel stressed about the reimbursement process, and can be confident that their purchases are compliant. Spending then becomes more proactive, and they can buy what they need to do their job without delay. The finance team no longer feels like they have to police expense reporting, and employee expense transactions are available in real time.
Airbase clients frequently tell us the increased visibility and control afforded by a spend management platform leads to a greater sense of ownership with regards to employee spending. Michael Zheng, Head of Finance at Affinity, summed it up well. “Airbase has shifted the conversation around spend. What used to be a post-expenditure questionnaire, ‘Why did you spend this?’, is now a collaborative planning conversation, ‘What will you need to spend on in the short and the long-term and how will it benefit the business?’”
Let us show you how we can help you create a reimbursement process that improves your spend culture!
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.
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