Many businesses struggle with inefficient and ineffective expense management systems that lead to wasteful spending. This can have serious consequences for the business, such as reducing the cash flow and profitability, damaging the reputation and customer satisfaction, etc. By utilizing expense management systems, businesses can identify areas where spending is excessive and take action.
In this blog, we will explore a few expense reimbursement best practices to identify and eliminate wasteful spending in your business.
What is an expense management system?
The expense management system is software that automates employee expense processes from expense submission to reimbursement. It allows companies to manage T&E expenses, streamline expense report submission, and expedite approvals for faster refund disbursements. Expense management software gives you full visibility into your spending across departments so that you can monitor expense claims in real-time.
Traditionally, companies rely on manual steps to validate claims and process reimbursements creating an operational overhead for finance teams. The complexity of paper-based processes leads to errors and fraudulent transactions. Implementing expense reimbursement best practices needs an expense management system as it introduces transparency and accuracy in your workflows.
The big question for companies is how to streamline expense reimbursements. Let’s unravel this and save cost and time.
Choose the right expense management system for your business
Today, the market is flooded with multiple expense management systems that offer capabilities and features unique to them. When shopping for software, you must choose the one that suits your specific business use case. However, some core functionalities are essential to implement expense reimbursement best practices. Some of them are listed below:
- Easy, customizable approval processes: Every company has a different hierarchy and follows an approval process that is specific to them. An ideal expense management system must allow you to configure steps involving all the necessary stakeholders for rapid expense management.
- Create audit trails: The platform must have an efficient logging system so that you can easily conduct audits on demand and ensure compliance with industry standards.
- Customizable expense policies: You should be able to tailor corporate expense policies to validate transactions that are relevant to your business.
- Tracking compliance in real-time: Ideally, an expense management system should provide you with real-time visibility into expense policy compliance through an efficient expense tracking mechanism. It will help you to follow the expense reimbursement best practices.
- Mobile accessibility: It’s not a truly digital platform without mobile accessibility. By allowing you to manage your expenses across devices, the platform gives you the independence to run your operations from anywhere and at any time.
- Analytics and reporting: The expense management system must be your virtual financial advisor giving you valuable insights into your spending activities, which will help you in plugging leakages and ensuring stable cash flow.
- Integration with other systems: Your expenses are usually distributed across departments, channels, and platforms. An ideal software must be capable of integrating with different systems to harmonize data so that you get a full picture of your expense outlook.
Setting up and using expense management system
Expense management systems can bring a significant change in how you manage employee expenses and T&E spending. But before you can leverage its advantages it must be set up to align with your business processes. You can consider the below steps to ensure an automated expense management setup:
Streamline onboarding process: Investing in an expense management solution is just half the work. For you to generate ROI on expense management, your employees must be comfortable with the platform. If it adds to the hassle of expense reporting, they will feel frustrated creating more friction.
With Zaggle EMS, you offer an easy and user-friendly UI so that your team can easily navigate through the tool to make submissions, track claims, and check the status of reimbursements.
Simplify claims submissions: Employees must have complete flexibility when submitting their claims. Usually, the expenses are reported once they return from business trips. They will have to save all the bills and remember every transaction they made for a proper expense report.
Zaggle EMS simplifies this by allowing employees to use digital receipts to submit claims. It allows your employees to report spending in real-time.
Design easy approval workflow: To expedite the claims process as per the expense reimbursement best practices, you must configure your approval workflow by defining rules at every step. By pre-defining the claims journey through different stages, you can iron out the friction in your approval process.
Since every expense category will require approvals from different groups of people, Zaggle EMS allows you to create multiple approval workflows.
Create a seamless validation process: You must set up your verification and authentication checks for faster processing so that employees don’t have to wait for weeks and months to get their rightful money.
You can define custom approval workflow with Zaggle EMS at the category level. This will facilitate faster reimbursement
Automate reimbursement processing: Once a claim request clears all the approval stages, the expense management system must initiate the reimbursement process automatically. This will fastract payments to employees in line with expense reimbursement best practices.
With Zaggle EMS, you easily enforce corporate expense policies. This means almost every transaction your employee makes will comply with your regulations. This can help in the faster disbursement of refunds.
Identifying and eliminating wasteful spending using your expense management system
An expense management system will help you reduce unnecessary expenses across departments by identifying financial inefficiencies. Let’s check out how you can improve your spending management.
Detect common areas of wasteful spending
You can track and analyze every business expense that occurs across the enterprise using a centralized database. The platform will generate reports giving you a comprehensive overview of your spending. You get valuable insights into spending trends at a granular level. It will also help you identify avoidable transactions by evaluating department-wise or category-wise expenses. The platform can also send alerts or notifications when spending crosses a threshold or violates expense policy. It will help you be compliant with regulations to reduce risk, while also saving costs.
Use expense reports and analytics to track spending trends
With expense management systems, you get access to insightful expense reports and analytics that give you complete visibility into your financial activities. It helps you generate expense trends and user spending behavior. You can use this to identify cost-saving opportunities by making data-driven financial decisions. You can further be proactive in tracking spending across channels through real-time visibility and analysis. The platform will give you the intelligence to utilize your budget efficiently.
Develop and implement strategies to eliminate wasteful spending
Leveraging the capabilities of tracking, and evaluating spending patterns, you can implement strategies to optimize your expenses by eliminating wasteful spends. Some of the strategies that you can implement are given below:
- Identify departments or categories that are overspending, and readjust budget to give more power to departments that generate better business value.
- Use real-time tracking of spends to quickly identify and block illegitimate expenses or instances of overspending.
- Implement expense reimbursement best practices by automating approvals for certain expense categories.
- Take advantage of mobile accessibility to quickly review expense claims for accurate and timely reimbursement.
Conclusion
Wasteful expenses bleed money out of your business and can upset cash flow due to unexpected spends. It is not just financial common sense to reduce unnecessary spends but also a business strategy to optimize your budget. Expense management systems like Zaggle EMS empower you to control your spends so that you can save costs by eliminating wasteful spendings.
Learn about the capabilities of Zaggle EMS in detail here.
