How to maximise efficiency with automated expense management

In the fast-paced world of modern business, manual expense management can be an unnecessary drain on your resources. Not only is it a time-consuming burden on staff, it brings the risk of potentially damaging inaccuracies. The good news is expense management systems can provide you with a more effective way to manage expenses.

With a specialised expense management solution on board, you can wave goodbye to onerous paperwork and error-prone data entry, and stay effortlessly compliant with tax rules and regulations.

In this post, we’ll look at some of the pitfalls of traditional expense management, and see how switching to an automated expense management system could help you overcome them.

What types of expenses are included in expense management?

Managing employee expenses and reimbursements is, naturally, an important aspect of expense management. However, there’s more to it than that.

Expense management can, in theory, include all the costs required to keep a business running profitably. These can range from office rent and salaries, to utilities, advertising, and software licences. Companies also need to find a way to keep track of sundry expenses, to ensure a complete expense management system.

Why is expense management so important?

Robust expense reporting allows companies to track all the purchases they have made within a set time period, and check if spending is in line with budgets. It’s a critical element of maximising tax deductions and accurately submitting accounts. Insights into organisational cash flow also allow organisations to see where they can make cuts and maximise profits.

Expense management is vital to optimising internal operations and ensuring compliance with external regulations. A clear picture of company expenses impacts far more than simply bookkeeping workflows and requires input from across your organisation.

Why your traditional expense management methods require an upgrade

In traditional expense management systems, things are done manually. For example, staff collect and submit physical receipts, and forms are filled out by hand. Paper gets pushed from one department to another.

This can pose a number of challenges to a business including:

• Excessive downtime: Entering and processing expense reports manually consumes hours of staff time - time that could be spent better elsewhere. Paper trails between departments mean documents could end up in the wrong places, and bottlenecks can develop.
• Risk of errors: A manual expense system can falter right from the start, for example, when receipts go missing, or are incomplete. Human errors also inevitably creep in too. These types of mistakes can damage budgeting and financial forecasting, and create the risk of non-compliance with tax authorities.
• Lack of transparency: Conventional approaches to expense reporting offer limited insights into costs and spending patterns. Without the ability to see data in real time, companies can’t easily identify areas that require improvement.
• Inconsistency: Staff often find it difficult to ensure that all kinds of expenses are documented properly. Correct categorisation of expenses is therefore crucial in order to align with company policies and tax requirements.
• Missed opportunities: Many business expenses are tax-deductible, but they need to be properly recorded before being submitted. The time lag created by manual processes means tax break windows - and potential cost savings - can be easily missed.
• Employee frustration: Manual expense management often causes approval bottlenecks, which leave staff out of pocket. On average, a third of employees have to wait over two weeks to be reimbursed, which means they have to cut down on their own personal spending in the meantime.

No matter how clear your expense management policies are, if you are reliant on manual processes to manage expenses you are likely to suffer errors and non-compliance. At the very least, a manual expense management process will take up more time than necessary and limit your ability to gather real-time insights into your operational cash flows.

The benefits of automating expense management

The primary issues with traditional expense management systems are human error, and bottlenecks caused by arduous manual processes. The more of your expense management process you can automate, the simpler it is to manage all types of business expenses. A simpler process makes it easier for employees to follow that process and maximises the quality and quantity of financial data you’re able to capture.

Fundamentally, an automated expense management solution ensures greater accuracy and transparency in bookkeeping and accounting, helping you stay compliant, all while reducing downtime and freeing staff from the burden of paperwork. Critically, an automated bookkeeping process makes it possible to get real-time insights into business expenses, allowing you to keep financial records up to date and capture data that helps with strategic business planning.

What to look for in automated expense management systems?

When you’re looking for good expense management software make sure it has the right features to meet your specific requirements. Here are some essential attributes to look out for:

• Digital receipt capture: Choose a tool that allows employees to take pictures of their receipts on a smartphone, so they can upload them directly to your system in real time. This eliminates paperwork and ensures accurate record keeping, and streamlined employee expense management. Once all information is in the cloud it’s accessible to all the finance team.
• Flexible upload methods: In addition to receipt capture, a complete expense management tool needs additional upload methods. For example, look for features that include email scanning for invoices, bank fetching to automatically retrieve transaction data, the ability to drag and drop files into the system, and integrations with file sharing platforms such as Dropbox.
• Supports integration: Select software that seamlessly integrates with your existing accounting solutions, for example Xero. This ensures full synchronisation of data across your systems, so that your financial records are accurate and up to date.
• Automated approval workflows: Automated expense management systems simplify complex approval processes, and enable you to set customisable spend approval workflows and limits, based on your specific policies. Opt for software that gives employees real-time updates throughout the reimbursement process, alerts managers when they need to approve expenses, and alerts employees when they’ve been reimbursed.
• Automatic categorisation of expenses: Meticulous sorting and organising are crucial to a business expenses system, to enable efficient allocation to relevant cost centres. An expense management system can do all this hard work for you.
• Mileage tracking: If employees need to travel for work purposes, incorporating a mileage tracking feature within your expense reporting system is key. The ability to record trips on mobile makes it easy for employees to log journeys, with reimbursement based on pre-applied rates.
• Real-time reporting: Opt for a tool that utilises AI for advanced data analysis. With real-time visibility into expenses you can keep track of pending, approved, and reimbursed expenses. You can also gain invaluable insights into overall expenses, spot trends, and identify cost saving opportunities.

Overall, a quality expense management platform needs to be flexible and cover all aspects of expense management. For example, tools that simply focus on employee expense reimbursement won’t provide visibility across all expense categories. It’s also important that expense management and bookkeeping tools integrate with accounting workflows, otherwise you will create a headache for your accounting teams when they need to access this data.

An automated bookkeeping tool that ticks all these boxes (and more): Dext

At Dext, we provide expense management software that allows you to scan receipts on the fly, speed up approvals, extract and categorise data, and perform advanced analysis of all your expense management information.

Dext is a standalone solution that focuses specifically on expense management and bookkeeping automation, but integrates seamlessly with your other accounting systems. This allows you to simplify operations, while keeping everything in one place. With everyone on the same page, management teams can quickly gain a holistic, real-time view of expenses, for better insights.

If you'd like to find out more about Dext's expense management solution, watch our recent webinar – Maximise Dext for Effortless Expense Management