What is Employee Expense Management?
Expense management can be defined as any organised method for processing expense reports and approvals, as well as employee reimbursable expenses. Expense management entails more than just keeping track of employee-initiated expenses. It also defines all of the policies that are used to manage spending all at once.
Because managing expenses takes a significant amount of time and effort, many organisations want to know exactly what they can gain from it before implementing a proper procedure. Depending on who you ask, expense management entails a variety of tasks:
- It is used by the finance team to keep accurate financial records and to make future business decisions based on past trends.
- Employees want reimbursement to be as simple as possible and as fast as possible.
- Management simply desires proper expense tracking for risk management, as well as more opportunities for growth and productivity.
What is the expense management process?
Let's take a look at a typical configuration. On behalf of the company, an employee makes a purchase related to the job. Then the following occurs:
- Employees submit expense reports to management and reimbursement claims.
- Those claims are either accepted or rejected.
- Payments are scheduled and then made.
- Auditing purposes necessitate the retention of records and receipts.
Each of these steps keeps anything from falling between the cracks. In the event of an ill-advised purchase, corrective action can be taken.
What are the objectives of the employee expense management process?
Companies that set up expense management processes usually have a few goals in mind:
- Create actionable insights into the firm's overall financial health.
- Monitor employee spending to identify cost-cutting and risk-reduction opportunities.
- Reduce reimbursement cycles to boost employee morale and productivity.
- Improve the security of your document management.
What are the benefits of employee expense management?
1. Legal regulations for tax deductions
Keep proper financial records, and you'll find yourself in compliance with the IRS's reporting guidelines. If you do well enough, you might get more deductions.
2. Spending control
Forecasting future finances becomes much easier once you are aware of and understand the operating budget.
3. Audit activity in the event of fraud
Take charge of your cash flow to keep employees from abusing company funds. Companies must frequently protect themselves against occupational fraud, such as overstating costs or submitting false records, by implementing stringent policies.
An expense management process ensures that all expense claims are accounted for and reimbursed as soon as possible, while also keeping track of all activities to prevent fraud and promote compliance.