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April 05, 2021
4 minute read

Everyone hates expense reporting. So why keep doing it?

Everyone hates expense reporting

Worse than doing taxes? Yup. According to a survey of business travelers, over half of respondents said they’d rather do their taxes than complete an expense report. Why, in our high-tech world, is this still such a dreaded task? Mainly because legacy systems haven’t kept pace. Let’s look at what a good reimbursement process addresses. Employees who spend personal funds for company purchases need to:

  1. Know what is a permissible expense.
  2. Know to whom they should submit their request for approval.
  3. Submit for reimbursement without being buried in a paperwork backlog.
  4. Have their requests approved quickly.
  5. Get reimbursed without a long wait.

To make a payment to an employee, the AP team needs accurate information, receipts, and evidence that the spend was in compliance with company policies. They then must schedule expense reimbursements into the work of balancing the books at the month-end close.

In most companies, however, that entire process is currently not only administratively burdensome, but it places accounting teams in the awkward position of policing and nagging their colleagues. Finding efficiencies really should be a priority. An even more troubling stat from the survey is that three of out five respondents had experienced difficulty paying a personal bill because of delays in processing work-related expense reimbursement requests.

Some companies have eliminated the need for expense reporting by insisting that all expenses be paid with corporate money. But most realize that there are times when employees need to make purchases using their own funds, especially when traveling or entertaining clients, and then ask to be reimbursed. To process those expense claims, the finance team must either use a separate expense management system, or reconcile multiple spreadsheets and manually code data to the GL. Faced with many onerous tasks, including securing approvals, executing payments, and making journal entries to transfer those expenses to the company, doing taxes might seem like the better choice once again.

But with a truly consolidated spend management platform, employee expense reimbursements are simply another automated flow, handled by using the same rule-based policies and workflows as all other expenses.

In a fully automated expense management system:

  • Expense requests comply with corporate policies on what constitutes an eligible expense.
  • Requests are routed to the right approver(s).
  • Receipts are submitted when required.
  • Payments flow directly to the employee’s bank account.
  • All expense reimbursement transactions sync directly to the GL.

Employees don’t have to wait for money, or worry about filing expenses incrementally. If, for example, they pay for a taxi with their personal credit card on a business trip, they simply submit for the taxi reimbursement in real time, without having to collect all expenses associated with the trip before submitting. The age of the end-of-trip or end-of-month collation of all receipts is over; it’s much simpler to submit one at a time, as the spending happens.

The process of requesting reimbursements becomes a natural part of the employee’s daily workflow, with the AP team getting all the information they need automatically, so the employee is in control of getting their own money back. 

AP teams don’t have to pester employees about ineligible reimbursement submissions, or deal with missing receipts. The status of each individual expense claim is fully visible, and policies are transparent to everyone involved, eliminating confusion. In effect, the emotion, confusion, and hassle are removed from the process.

And, most importantly, nobody has to deal with bulk expense reports ever again.

For this process to work in a system like the Airbase spend management platform, just a few things need to be set up:

  1. Administrators configure employee reimbursement rules in the platform to reflect company policies, including submission time frames and approval chains, which can be based on spend thresholds or type of spend.
  1. Administrators set mandatory fields, such as vendor, amount, date, and category.
  1. Employees enter their banking information in order to receive expense reimbursements directly.

From then on, employees:

  1. Submit an expense by uploading their receipts and completing the mandatory fields. Expense requests can be submitted individually as-they-happen or in groups, so it’s no longer necessary to compile receipts, and funds can be received sooner.
  1. Receive a warning if their request is for spend that is outside of the company’s policy, or the request can be blocked, based on the reimbursement policy configured by the administrator.
  1. Submit to approvers to review each request, who can add comments if necessary, and approve or deny via Slack, mobile device, email, or web platform. Requests are approved and processed in real time, to keep teams moving and the books up to date.

When those steps are complete, the reimbursement is processed and funds are routed to the employee’s bank account. The transaction is automatically routed to the GL.

Making the reimbursement process better than doing taxes is admittedly a low bar. A spend management solution that reimagines the whole process is the only way to make the radical improvements needed to help make employees and accounting teams alike happy about the process. If your company is trapped in a legacy system that makes everyone unhappy, it might be time to make the switch. If you’d like to learn more about Airbase’s spend management platform — the first to truly combine all AP functions, including reimbursements — let’s talk.

Want to learn more about the end of expense reports? Check out Airbase’s webinar, The end of expense reports: Rethinking employee reimbursements.

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