Hands up if your co-workers love completing expense reports and answering questions from the accounting department about them.
Anyone? We’re still waiting.
We could be waiting for a long time, according to research (not to mention plenty of anecdotal evidence). One study by an HR solutions provider found that over half of survey respondents prefer doing their taxes over completing expense reports. What’s even more interesting, however, is that 84% of respondents felt their overall opinion of their employer would improve if the expense management system improved. And 78% felt they would be more productive.
Clearly, cumbersome expense reporting procedures aren’t just annoying; they can actually impact a company’s success. What’s more, AP teams (well, actually it’s usually just one person) are under increased pressure to overcome employee resistance to reporting expenses when in an uncertain economy. And AP already has a lot on their plate when it comes to employee expenses: ensuring all receipts are accounted for and credit card statements are reconciled before the month-end close.
The good news is that tools are available for easier expense management. Corporate cards, including virtual cards, with automated workflows and instant insight into spending, provide a seamless experience for employees and can shift the often-negative perception that can develop around expense tracking. As with many other technological innovations, the time to change is now.
The hidden costs of expense reporting.
Even with advances in technology, many finance teams continue to spend hours doing tedious reconciliations. How could that be, in this age of digital innovation? The following stat might explain why: 46% of organizations don’t monitor the time it takes to process expense reports. That’s a painful oversight. Another study, by the Global Business Travel Association, found that it costs $58 to process a single expense report and $52 to correct a mistake on a submitted one.
Corporate and virtual cards: Why the software behind the card is the differentiator.
At first glance, corporate cards might seem like a great way to streamline expense processing and they’re certainly a step above employees using their own credit cards. However, just handing over a shared corporate card doesn’t remove the delay between when the spending took place and the arrival of the credit card statement at the end of the month. That time gap often leads to discrepancies between the dollar amounts that were budgeted and what was actually spent, making it impossible to know exactly how much money is available. Without a timely picture of financials, accurate budgeting and financial analysis are far more difficult. To make matters worse, many departments share a card, which means keeping track of who actually purchased something and if it was within budget difficult, particularly in this era of remote teams. Of course, the finance team still must invest time in reconciling credit card statements, expense requests, and booking each transaction to the GL
When a defined approval system is built into the creation of user-specific corporate or virtual cards, spend limits are set in advance. The finance team can therefore track spending before they receive the monthly credit card statement, which removes the often unpleasant task of resolving errors in order to complete the month-end close. Right upfront, they can see who owns each purchase, what was purchased, and who approved it. Plus, when the cards are one component of an intelligent spend management system, all transactions sync automatically to the GL.
The flexibility of virtual cards in particular aids in providing full visibility into employee spending, Virtual cards can be created for specific vendors, for specific amounts, and can be set for specific time frames. They can also be used to pay bills. When they’re part of a complete spend management system with a bill pay function, the approval chain, the amount of the bill, its due date, and all supporting information, are all available in one place.
How approval workflows help employees do their jobs.
From an employee’s perspective, requesting a card is simple. Approvals can happen over Slack or email, and they have clearly defined spending limits. As an added bonus, if they’ve used a physical card, the app will prompt them to attach a receipt at the time of purchase, which can be as simple as taking a photo and uploading it to the mobile app.
In addition, the impact on the morale of a strong approval workflow should not be overlooked. Normal human error, such as lost receipts or error-ridden expense reports, can force finance team members to chase after their co-workers for resolution. But only very few people enter finance because they want to nag co-workers about reporting. On a similar note, employees don’t like to be told when they’ve made a mistake or that they’ve spent too much money purchasing items they need to do their job.
With the right tools, expense reports can become a distant memory. Sure, they were useful in their time, but when corporate cards, virtual cards, robust reporting tools, and automated workflows are combined on the same platform, a company can have a full view of its spend at any time. Find out how you can eliminate the nuisance of expense reports and elevate your company. Contact Airbase today!