Automated Expense Management
For many business owners who track and report expenses for business travel and entertainment (T&E) using traditional methods, the process can be a time consuming and frustrating one. These antiquated processes come coupled with lost T&E receipts and likely the bureaucracy involved in obtaining approvals and reimbursement. Therefore, the concept of automated expense management, in which software and mobile solutions replace manual processes, has great appeal.
But what few realize is that automated expense management provides far more than increased efficiency and hassle reduction. Thanks to the cost savings, the fraud fighting abilities and analytic insights the technology enables, it can also have a significant impact on the bottom line.
Streamlined procedures save not only time, but also money. The statistics are revealing: According to a recent survey by Advisors. com, expense processing through automated systems costs 78 percent less than manual processing systems. With some software, cost savings can be up to $25 on each expense report processed. These dollars quickly add up!
The fraud-fighting capabilities of automated expense management are no less significant. As much as 19 percent of an average firm’s T&E spending violates company policy, and 33 percent of all expense reports actually contain erroneous or fraudulent charges. Additionally, the Association of Certified Fraud Examiners found that expense reimbursement comprises about 13 percent of all company fraud, with a median annual loss of $25,000 .
Now factor in a company’s average T&E spending: 8-12 percent of its entire budget, and the losses become truly daunting. In today’s tough economic climate, few companies can afford them.
Clearly, the potential for cost savings through automated expense management is high. What is also high is the potential for strategic insight. By analyzing data gleaned through automated expense management, firms can actually help optimize their businesses.
“Expense management has evolved in recent years from a classic back-office function to a strategic set of processes that can drive tremendous corporate value,” indicated Aberdeen Group .
This development is not very surprising. After all, users of expense management technology have easy access to the data that influence strategy. Graphs and charts can be created with a few clicks, and the results are revealing. Those who view the reports can quickly see, for example, which salespeople are spending the most on T&E. If these expenses do not translate into sales, management might consider a shift in allocation of budgeted funds. It is also simple to determine which vendors are the most popular. Perhaps, armed with reports, businesses can negotiate special deals with such vendors.
T&E spending is the second-largest controllable expense in a company’s budget. And as the economy improves, this spending is likely to increase. Savvy firms are negotiating this growth with automated expense management. But the savviest among them are not only using the technology, but they are also learning from it. The insights they glean, in turn, drive further growth by ensuring that every dollar spent on T&E is spent wisely.