Why Modern Businesses Direly Need Expense Reporting Systems

Joydeep Das

Joydeep Das

Senior editor

Parul Saxena

Chief editor

Last updated: June 11, 2021

Are you one of those businesses that operate with multiple traveling employees? If so, you are probably aware of the complications involved in tracking their travel expenses.

Looking for Expense Management Software? Check out SoftwareSuggest’s list of the best expense management software solutions.

Several companies worldwide find it cumbersome to track, manage and streamline expenses for their employees who are constantly traveling for business. While some of these organizations provide advanced payments to such employees, many others rely on paper-based systems to record employees’ expenses and reimbursements. However, each of the above alternatives has its drawbacks.

Organizations that issue advance payments to employees seldom see the amount coming back to them. In fact, 57% of organizations of organizations have no idea where their biggest expenses lie. Paper-based expense records are unreliable and prone to errors. Moreover, both such systems have no way of validating employee expense claims.

So how exactly do these companies function without a stable expense reporting infrastructure? A vast majority of firms have turned to technology to solve the above problems and now use specialized software to streamline their expense reporting. Popularly known as travel and expense management systems, these solutions help organizations keep track of all employee expenses and reimbursements.

Let us now try to understand what these systems do and how they can help organizations.

What is an Expense Reporting System?

An Expense Reporting System is a tool that helps organizations keep track of employee expenses, validate them and provide necessary reimbursements. With such systems in place, employees no longer need to apply for travel expenditures manually or collect paper receipts.

Expense reporting systems help employees track, manage, and submit their expense reports digitally on the go and automate the process of reimbursements. They also help organizations get complete visibility over their business expenses, helping them prevent overspending, deviant employee spendings, and cut down on unnecessary expenses.

When organizations have employees working for them outside the premises or traveling to different destinations for business, they are supposed to pay for staff utilities and expenses. This can include fuel charges, prices of tickets and reservations made at hotels, food charges, phone/internet bills, shipping charges, and much more. There are also certain organizations that provide imprest to employees before they begin traveling and make adjustments in their salaries later based on the receipts received.

In a survey conducted in the UK, two-thirds of participants admitted to never reading their organization’s expense policies. This meant that they had no clue about what kind of expenditures were allowed in their organizations. Another shocking report suggested that 85% of employees lie on their expense reports. In some cases, employees also shell out the cost of these from their own pockets and get them reimbursed later with the help of receipts.

No matter the approach an organization has towards employees’ expenditure management, expense reporting systems help employees file their expenses digitally, claim reimbursements and advances, and receive payments. Organizations also benefit much from the use of such tools as they can view expenses incurred in real-time, validate them, process payments, compare records, and find out ways to reduce overspending.

Today there are both offline and online expense reporting tools readily available for businesses to implement. However, most businesses are doing away with on-premise software solutions to gain greater flexibility, transparency, and expense visibility. Employees also find web-based solutions to be more convenient as they are able to update expenses on the go.

Let’s delve deeper and discover what web-based expense reporting solutions are capable of.

Web-Based Expense Reporting

As the name suggests, web-based or online expense reporting software allow businesses to track how employees are spending while on the move. They help managers provide quick approvals in reimbursements, verify expenditure claims and transfer funds to employees instantly.

These SaaS-based solutions do not require any software installation and can work in tandem with mobile applications to provide details of all claims made and pending expenses. Modern expense tracking solutions also generate detailed expenditure reports to help organizations understand what they are spending the most on.

Besides offering mobile access for reporting on the go, online expense reporting software offer features like receipt imaging and barcode & QR code scanner for quick verification of bills. They improve your bottom line by saving time, cutting costs, boosting productivity, and improving the profit margin drastically.

Importance Of Expense Reporting Systems

Managing expenses is a surefire way to improve a company’s stability. Through proper expense reporting and control, companies can greatly reduce their spending and improve sustainability. Expense Management Solutions consolidate reports, improve processing speed and reduce dependency on paperwork, which is the reason behind their immense popularity.

The market for expense monitoring software is expected to accelerate with a CAGR of over 12% between 2020 and 2024. Last year, there was a growth of 11.32% in this sector which majorly came from North America. Of late, these systems have become a necessity for many businesses especially due to their fraud prevention features and the mobility they offer.

Benefits Of Expense Reporting Systems

There are several advantages of using expense management software, which are described below:

1. Time-saving:

Companies save a huge amount of time with the use of expense reporting systems. Manual expense claims take 20 mins to process on average, which can be reduced to minutes with the use of software. With the use of digital systems organizations save on valuable company time while the system automatically calculates, authenticates, and processes employee expenses.

2. Error-free:

According to reports, 19% of expense reports have errors. Expense tracking solutions minimize the chances of human errors and data redundancies. As all transactions are initiated and calculated digitally, the chances of overspending are reduced significantly.

3. Cost-effective:

An average expense report costs about $35 to process. By using software, companies can identify avenues where spending can be curbed. You can easily spot extravagant spendings from your team and spot irregularities with the usage of the software. Moreover, the price of software is much less than hiring a dedicated accounts team.

4. Boosted Employee Morale:

One-third of employees feel financially unstable because they have to deal with unexpected/large expenses. Expense reporting systems make it very easy for employees to file their expenses and ask for approvals. This improves staff morale and makes them believe that the company actually cares about their well-being and convenience, which motivates them to produce better results for their companies.

5. Mobility:

Since most online expense reporting tools today allow web and mobile-based access, connectivity, communication, and accountability increase significantly. It also makes teams track and monitor expenses, get notified, and gain approvals on the move

6. Simplified workflows:

Most expense software offers rule-based dynamic workflows that reduce manual intervention. They reduce the turnaround times and provide instant notifications to speed up the expense management process.

7. Expense Reports & Analytics:

Digital tracking systems allow companies to review their spending data. It offers finance teams a clear overview of how much is spent and helps them adjust their expense management strategies.

8. Receipt Verification:

Most expense monitoring solutions provide receipt imaging options that allow staff to take pictures of receipts from their mobile phones and upload them to the system directly. Modern systems can verify the authenticity of such receipts instantly, preventing miscalculations.

Top Expense Reporting Software

Let us now take a look at the Top 5 expense reporting tools available today:

1. Zoho Expense:

Zoho Expense logoZoho Expense reporting tool caters to small and medium-sized businesses, helping them file expenses and automate the billing process. It is reasonably priced and contains an exhaustive list of features to ensure that all of your transactions can be managed from a single interface.

 

2. SAP Concur:

SAP Concur logoCurrently, the world’s leading provider of integrated expense travel and invoice management solution, SAP Concur guides employees through each trip and populates charges effortlessly to generate detailed expense reports. The solution integrates real-time data using AI for auditing a hundred percent of transactions and providing businesses clear visibility of where they are spending most.

3. Expensify:

Expensify logoThis solution helps you keep track of all your expenses, send invoices and make reservations instantly. With Expensify, you can easily take a photo of any receipt, and software captures all the details for you. This tool codes, encrypts, and submits business expenses for easy approval and automatically signs their existing accounting software to make your life easier.

4. Webexpenses:

Webexpenses logoThis cloud-based travel and expense management solution helps businesses of all sizes automate their manual processes, reduce errors and increase expense visibility. Webexpenses is used in over 70 countries and has won multiple awards for its technology, service, and innovation.

 

5. Fyle:

Fyle logoThis unique software offers a fresh perspective on managing and monitoring payments, which is ideal for most dynamic organizations. Fyle lets you submit expenses on the go shoe everyday apps like WhatsApp, Gmail Outlook, and your phone gallery. Authentication happens within seconds, and employees instantly get notified when they are breaching company policies. It also offers advanced analytics to keep you updated about your top expenses, budget, team expenditures, MIS, policy violations, and much more.


Wrapping Up

We know how critical choosing the right expense management system is for any business. If you have relied on manual systems so far, it would be best to choose a simple and affordable solution with basic features before you move on to something more challenging. Expense Management Solutions come in all shapes and sizes, but the important factor governing their choice should be how well they would integrate with your existing tools and work culture. If used correctly, they can provide you with a lot of useful insights and visibility that would help you reach greater heights in business.

Joydeep Das
The newest addition to SoftwareSuggest's writing armada, Joydeep Das has extensive experience with both technical and non-technical content. However, marketing and promotional topics have remained his true love since over a decade.

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