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Slow, inconvenient, fiddly, and compliance-heavy: traditional expense reports are a masterclass in workplace frustration. They're so irritating, it's almost impressive - almost.
You'd have a hard time finding anyone who's genuinely a fan. The process is stressful for employees, tedious for finance teams, and even a fraud risk for the company.
Fortunately for you, clever people have been hard at work on smarter approaches to expense management that eliminate the pain points entirely.
But hey, if you find yourself still longing for the classic expense report experience, you could always arrange to have you and your team periodically stung by wasps.
More on the expense process:
Expense reports: Why do we do this to ourselves?
You know it as well as we do: expense reports create unnecessary friction for everyone involved.
The employees hoarding receipts for coffee and sandwiches; the finance team working their way through teetering stacks of paper; the accountants making sure everything squares up at the end of the month: everyone loses valuable time to this outdated process.
Every step in the process feels like a Kafka novel wrapped up in a Munch painting living inside a Beckett play: bureaucratic, vague, and inevitably resulting in existential dread.
Worst of all? Senior managers spend precious time approving trivial purchases. Think about it - instead of rubber-stamping Brian's skim latte, Head of Marketing Rachel could instead be working on the next run of digital ads, or meeting with market leaders to strategise on potential partnerships.
Nobody wins with paper expense reports, ever. So, why do they persist?
Because inertia is powerful. People are so used to this way of doing things, they continue asking their staff to shell out their own money for company expenses and stuff their wallets with fistfuls of receipts, only to be reimbursed many weeks later.
It shouldn't be so tough. Fortunately, modern expense management platforms offer a clear path forward. But more on this soon.
Painful for everyone (this means you)
Dealing with expense reports ranks among the top workplace frustrations across all departments. And not just for the poor soul in the finance team tasked with reviewing and checking everyone's meal and travel reimbursements. Everyone hates them.
Not only are paper expense reports a common bugbear, they’re also an expensive one. Companies often ignore the hidden costs of traditional expense management processes, which can be significant and distract from the core business.
Estimates suggest the life cycle of a single expense report is 30 days from submission to payment, with a total of nearly 50 minutes of company time spent dealing with each form. When you multiply this across your entire team, the cumulative time drain becomes staggering...
A headache for employees
Even if you have a comprehensive and informative expense policy and the best finance team in the universe, traditional paper expense reports remain a significant burden.
Not only that, but they can have a significant negative financial impact on your employees, particularly when handling significant expenses like travel or accommodation. In one study, a third of workers felt "financially unstable" because of expenses they were forced to incur.
Forcing employees to front company costs creates cash flow stress that directly impacts morale and retention. What's more, it can - in some cases - lead to a higher likelihood of expense fraud.
And even though this remains the "classic" way that companies manage cost, it won't be for long. More on that below...
Painful for your finance team
Your finance team bears the heaviest burden in this broken system. They're the ones having to process your employees' expense reports, including reviewing reports and chasing staff for missing information.
A study released by the GBTA Foundation has shown that one in every five expense reports needs to be reviewed. It's not just a matter of ticking boxes.
This means even more time and effort sunk into meaningless details.
There are much, much better things your finance team could be doing to help grow your business. They have strategic skills that could drive real business value - they didn't go to business school just to end up taking care of Brian's tuna mayo reimbursements!
Not only are expense reports inefficient - they’re a security risk
In addition to being a time-consuming hassle, traditional expense reports create significant financial oversight gaps.
By having employees pay for expenses and claim them back, companies operate blind to actual spending patterns until month-end reconciliation. This means a greater chance of nasty surprises at the end of the month.
Handling company expenses through a company credit card, while a popular alternative, is an even worse idea in terms of security, for the following reasons:
Company credit cards are easily misplaced, meaning they can end up in the wrong hands either inside the company, or worse, elsewhere.
Credit card expenditure is hard to track until after the billing period, when it’s too late to query a particular expense.
Credit card fraud is a very real risk, and recovery from credit card fraud can be time-consuming and disruptive to the core business.
But what's the alternative?
Modern expense management platforms have fundamentally changed the game.
With an integrated expense management platform, every step of the company expense process is simplified and streamlined. What’s more, most steps in the process are instantaneous, meaning there’s no waiting around for others.
Comprehensive expense management platforms - such as Spendesk - achieve this via the following features:
Real-time expense validation: With expense reports or company credit cards, expenses are charged without the pre-approval of management or finance. A dedicated expense management system enables your team to request same-time validation from management for specific charges, meaning quick and easy transactions, and no surprises at the end of the month.
Pre-loaded expense cards: A clever alternative, debit cards allow staff to spend pre-authorised funds on approved classes of expense (for example, travel, accommodation, or catering). This reduces the potential for the misuse of funds, giving you and your team clarity and consistency regarding expenses.
Single use virtual debit cards: An expense management system can allow staff to generate virtual credit cards, producing a single-issue debit card number for use only in paying a pre-approved expense. This effectively reduces the risk of credit card fraud to zero, as the credit card number cannot be used for any other purchase.
Complete expense visibility: Real-time expense processing provides a comprehensive picture of company expenses at any point in the month, including total balances per staff member and per expense category. This level of detail can help with the early detection of potential expense fraud.
Automated recurring payments: A dedicated expense management platform allows you to automate recurring expense payments, meaning less time soaked up with handling predictable, low-risk payments.
Integration with accounting software: A good expense management tool will also interface seamlessly with your accounting software, meaning compliance and taxation requirements are handled quickly, conveniently, and accurately.
All of these features work together to boost the security of your company’s funds and remove the need for paper expense reports. This means less hassle for you and your team, and more time for you to spend on the important things. Rejoice!
Keys to effective expense management
If you're ready to upgrade your ancient expense processes, here are a few aspects you ought to prioritise, shared by other expert companies.
Penta - Go paperless
The days of paper expense claims should be long behind. Today, it's far more efficient and safer to go digital.
"These days, just about everything can be digitized and made accessible on a mobile phone or laptop. Going paperless can also make your travel expense reports a lot more organized and easy to handle in the first place."
30SecondsToFly - Use centralised technology
When every employee handles their own expenses, company spending is naturally spread out. To overcome this, handle all spending through one central platform.
"To deal with poor visibility into spending and concerns about missing or incorrect information, travel managers might explore emerging technologies that streamline these processes. End-to-end technologies generally allow travellers to book all travel through the software, and travel managers receive detailed analytics about employees’ spending."
BusinessTravelDirect - Capture expenses early
Expenses are usually recorded at the end of the process when the employee seeks reimbursement. This means you have no idea what's spent until it's too late to have an impact on it.
"A fundamental problem with manual, paper-based processes is that visibility of spend comes too late to inform intelligent decision making. Company spend needs to be visible as early as possible to give you meaningful insight."
And when expenses are recorded earlier you have a better chance of catching errors and storing every important document.
AppZen - Use smarter tools, including AI
You and your team can't personally review every single expense report. But machines can - instantly.
"Many companies only audit between 2-10% of invoices and expense reports a month. [This] leaves a whopping 90-98% of invoices and expense reports completely unscrutinised.
AI is a game-changer, allowing finance teams to audit 100% without any additional staffing resources. AI checks every invoice and expense report and assigns a risk score based on a number of factors, flagging high-risk expense reports and invoices for manual review. This helps your finance team spend their time much more productively and makes it possible to pay back low-risk invoices and reports much faster."
Be ready for audit
With an integrated expense management platform, you and your team will find it simpler and more straightforward to manage your business expenses. What's more, an expense management platform will also streamline your audit preparation.
For example, Spendesk's automated receipt capture and retrieval system means your expense receipts and invoices are automatically captured and can be retrieved quickly and accurately. Combine this with Spendesk's high degree of integration with leading accounting software, and you'll be ready for audit in no time.
Conclusion: You’ve got better things to do with your time
With a dedicated expense management tool such as Spendesk, you can wave goodbye to the daily torture of the traditional expense report process.
With prepaid expense cards, same-time payment validation, and virtual credit cards, nobody will have to go into their own pocket for business expenses. Even better - nobody will have to waste precious time and effort on stacks of pointless paperwork.
With an integrated expense management platform, you and your team will find it simpler and more straightforward to manage your business expenses. What's more, an expense management platform will also streamline your audit preparation.
For example, Spendesk's automated receipt capture and retrieval system means your expense receipts and invoices are automatically captured and can be retrieved quickly and accurately. Combine this with Spendesk's high degree of integration with leading accounting software, and you'll be ready for audit in no time.
Consider your company’s expense management needs, and take a look at how an expense management tool like Spendesk could save you time, money and stress.
Your employees (and your sanity) will thank you for it.
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