Do you face issues with travel and expense policy enforcement? Corporate expense policies are highly complex and are considered as a headache if not handled efficiently.
No two organizations have the same policy for out-of-pocket expenses and it is important to use expense report software for enforcing business policies. Without the software, any policy is difficult to enforce and it is challenging to work on a spreadsheet.
This article outlines some of the biggest challenges that businesses face when it comes to enforcing travel and expense policies.
The business rules review expense reports to sort out challenges such as non-compliance, expense fraud, loss due to out-of-policy spending and losing employee morale due to inconsistent policy rules.
Key Challenges in Employee Expense Management
Employee corporate travel expenses constitute over 10% of operating expenses. With such an amount at stake, effective business management is important to avoid non-compliance. Let’s see how the challenges can be overcome:
Well-defined Expense Policy
The effective expense policy not only helps in potential savings and avoiding risks, but also improves employee culture by enforcing rules consistently.
Employees must understand what is expected of them while mitigating risks. Organizations should start the process by understanding the policies created and how they can be enforced.
The next step is to understand the organization’s culture and objectives. A good expense policy balances employee needs with those of the organization, thus ending up with the right kind of behavior.
Policies should be reviewed on a regular basis to make sure they align with the organization and are up-to-date with the trends in corporate travel.
The policies should be effectively communicated, so staff are aware of the restrictions before making a purchase.
Not only does this avoid them committing compliance issues, but it also avoids any excuses for non-compliant expenses being submitted.
Outline an Effective Expense Policy
Once all the policies are created, the most critical step is to implement an expense management solution.
Any policy is difficult to enforce without an automated expense report solution. Expense solution should incorporate organization’s travel policy, regardless of the complexity.
The configurability must extend not only for out-of-pocket expenses, but should enable businesses to route approvals by the expense type, amount and GL code.
Expense policy consists of rules that integrate with software solutions to authorize, track, approve and reimburse employees for business-related expenses.
As the policies are configured into every step of the process, managers gain visibility in areas where they can improve business processes and manage spending effectively.
Managers can negotiate cost-effective travel arrangements, identify errors and issue better expense management rules and guidelines to develop better vendor relationships.
This visibility helps managers to figure out policy exceptions before spending takes place. Approvers can access the complete information so they can easily make informed decisions.
Enforcement comes from the system based on the approval rules. Eliminating the human element improves employee relationships and everyone’s focus will be on the organization’s objectives.
When you choose the client’s billing code when creating an expense report, the rules are automatically enforced.
Enforcement is Critical
Policy is important when it is enforced. The best practice is to integrate the policies into the expense management software in order to simplify the policy enforcement process.
SutiExpense can incorporate travel policies into the system, so you will get real-time notifications for T & E booking and reimbursement. The solution also guides users while purchasing or when filing the expense reports.
This will also apply rules consistently, ensuring that all parties are treated fairly. For instance, employees might get a suggestion for alternate travel methods when booking flights to certain destinations.
Above is the power of an expense management software for small businesses.
Auditing expense reports is a waste of time and resources, which will cost more than the savings it will generate.
Related: Accounting Vs Auditing
Automated solutions can generate audits based on certain criteria such as non-compliance patterns. The expense report solution enables you to conduct random audits.
Instead of telling travelers that they cannot book the flight, give them the option of pre-approval.
However, pre-approvals require verification with third-party systems. This would require approvers to manually log into third-party applications to validate the data in the real-time prior approving the expense.
Benefits of Business Rules in Employee Expense Management
- Eliminates ambiguities in corporate travel policies
- Minimizes confrontation with approvers
- Streamline processes for submitters and approvers
- Quick approvals