Managing expenses, is one of the most tedious and time taking tasks that an organization has to do? However, no one can deny the significance of these tasks. Therefore, the organization pays more attention to managing expenses and looking for a more optimized and efficient way to do these tasks.
Some organizations used spreadsheets and paper-based systems to manage their expense while well-developed companies used advanced technology for these tasks such as expense management software
What is expense management? Why do organizations give it importance?
Expense management is a system that an organization makes to deal with employee reimbursement claims, and will be an extra helping hand when it comes to Reporting on staff expenses. It is the process of recording, reporting, and providing the details of the expenses that employees of the organization pay from their pocket on behalf of their company and claim reimbursement from the company at a later point in time.
Companies pay more attention to managing their expense because it helps them to establish control over their employee’ spending so they can make an accurate financial record which helps them to make data-driven decisions in the future. Additionally, it helps to avoid miss spending and overspending. It also helps them to detect false and illegal reimbursement claims.
What are the ways of expense management?
Companies all around the world use different ways of managing their expense but they are always looking for an efficient, accurate, and reliable source to do these tasks. Following are some of the major ways that organizations used for performing their expense management.
- Traditional ways
These ways are too much common among organizations for expense management and commonly used in past days mostly:
- Paper-based expense management
Paper-based expense management is the process of manual data entry related to expenses. In this way, when employees travel they need to collect all the receipts and handwritten bills of their spending as proof of expense. Then they need to put them to create an expense report and submit it for reimbursement.
It is a time taking process. Studies say that it took an estimated 30 days to be reimbursed for a single expense report.
- Spreadsheet
The spreadsheet is a weapon for the finance team. This ways is the switching from paper to sheets that enable the finance team to analyze the expense report to identify errors, which may take many hours.
Spreadsheets became famous in the field of accounting after the arrival of the computer. Many finances professional adopt this way to make their financial management easy. However, when technology develops and introduces other ways than people think it is tedious. Some organizations still use this way for their expense management while some leave because it is time-consuming.
- Advance Way
- Expense management software
Expense management software is an advanced way of managing expenses. Such software offers an automated system to organizations for managing their expense and helps them to identify errors in reports. It enables them to do expense management efficiently, accurately, and rapidly.
What are the benefits of using expense management software?
Some of the major benefits of using expense management software are given below:
- Cost-effectiveness
The major benefit that such software gives is cost-effectiveness. It is the most cost-efficient way as compared to other traditional ways like paper-based management and spreadsheets.
You can choose software that suits your budget. Software is available in several versions, which enables you to choose one version according to your budget. Simple software can give you wonderful features, which help you to easily manage the expense.
- Error and fraud detection
Advanced and automated expense management software enables organizations and finance teams to easily detect errors and fraud in expense reports. It gives them accurate insights by which they can judge the legitimacy of reports.
- Ensure policy compliance
One of the major benefits that an ideal expense management system gives to the organization is its ability to ensure policy compliance. It makes everyone create reports according to the policy of the company.
- Flexibility and customizability
The customizability of the software is also one of the benefits of advanced and automated expense management software. The software can adapt itself and its functionality according to the changes in the policy of the company.
- Efficiency and accurateness
Ideal expense management software is efficient and makes all the processes quick. Additionally, it makes everything accurate and gives accurate insights to the finance team and organizations.