[IMGCAP(1)]With its origins in paper trails and manual processes, travel and entertainment expense reporting historically has been more of a black box for accounting professionals than a source of financial insight.
But by changing the expense management process, companies today are able to gain valuable insight into spend management trends and leverage their data in ways they didn’t necessarily anticipate. The benefits of which can reach beyond traditional expense reporting functions and result in an overall better experience, including increased employee satisfaction, greater compliance, and reduced spending.
Based on results from the Certify 2016 Expense Management Trends study, here are three innovative ways accountants are using web-based expense management systems and data to support their broader responsibilities within the organization.
Annual budgeting and forecasting
A company’s T&E budget is often loosely defined among other operating costs based on historical spending trends and projected revenue. Using a web-based solution, companies are able to break down the T&E budget for visibility into spending by expense category, department, individual employee and much more. This access to real-time data shows how the T&E budget is spent in granular detail, allowing for far greater accuracy when forecasting future spend on air, or negotiating hotel contract rates.
Web-based expense management can also have a positive if not somewhat unexpected effect on company forecasting. It should come as no surprise that employee failure to submit expense reports on time causes a lot of challenges for accountants. Incomplete or delayed T&E reporting makes it virtually impossible to maintain the books accurately. Automation encourages the regular and timely submission of expense reports, first and foremost because it is much easier for employees than a manual process. Also, most automated systems offer email notifications for employees and managers when reports are due or awaiting approval, further minimizing the risk of inaccurate forecasting data.
Invoicing processing is a really smart secondary application for a web-based expense management system. That’s because for all intents and purposes the process of paying an invoice is nearly identical to employee reimbursement. At a high level, a third party incurs a cost on behalf of the business, and in order to pay the third party, they must submit a request through the company accounting department. And the payment ultimately needs to be approved by the business partner outside of accounting. Sounds familiar, but there are notable differences in working with employees versus outside vendors, including the use of purchase orders, approved vendors, and management approval limits. But to put it in the proper context, think of your vendor invoices as if they were employee receipts. Now, run them through the same process: allow the submitting employee to take a photo of the invoice on their smartphone, then follow it through all the necessary approvals and steps in workflow with the same integrations for your accounting system. It’s easy to see the potential for vast efficiencies by processing invoices via an online expense management system.
It is important to note web-based expense management systems are really not optimized for invoice processing out of the box, especially on a large scale. While there are similarities, expense management and invoicing platforms are designed to meet the specific requirements for each function with the greatest efficiency possible. Company accountants can assess whether it makes sense to modify current T&E policies and procedures to include invoice payments, or if a specialized invoicing solution is more appropriate for the organization’s needs.
Where expense spending once occupied the shadowy corners of the corporate budget, today the demand for transparency in T&E reporting has never been greater. Sarbanes-Oxley, the Physician Payments Sunshine Act and certain IRS expense guidelines set serious penalties for companies and individuals who don’t play by the rules. So, the ability to prove effectiveness of internal controls and track compliance with these often complex regulations has added a new layer of responsibility for the accountant. Fortunately, instant access to expense data and automated compliance features available with most web-based systems make compliance auditing on this scale not only possible, but simple. And unlike a manual process, employees must meet certain hard-coded requirements in order to complete their expense reports for reimbursement. All expense information is then stored electronically within the web-based solution and can be easily analyzed whenever necessary.
As means for employee reimbursement, manual processes can more or less provide the basics any organization needs. However, with the average company now budgeting between 10 and 12 percent of total annual revenues for T&E expenses, the basics are not enough. Today’s accounting professionals need easier access to meaningful data, less paper, and true automation to gain maximum efficiency in travel and expense management.
Robert Neveu is president of Certify.