Automated Expense Management: The Key to Sound Financial Management
Automating your business expense management process lays the foundation for robust financial management. It optimizes how your business functions, paving the way for more efficient spending, saving, and investing.
While your accounting team is great at what they do, they are sorely underutilized when they have to spend the majority of their time reconciling reimbursements and painstakingly reviewing expense reports. These manual tasks cause headaches and invite more fraud, error, and inefficiency into what should be a simple process.
Don’t let great talent go to waste—or risk your business’s well-being.
Here’s how an automated expense management solution revamps your financial strategy.
The Three Pillars of Financial Management
To create a strategic financial management strategy, you have to focus on the three main pillars that will keep your business on track no matter what volatility you encounter. Those three fundamental pillars are:
- Forecasting using the past as a guide – A successful financial plan will tap into a company’s financial history to predict financial performance and identify potential growth and cost-saving areas.
- Prioritizing long-term growth – A strong financial plan will put long-term growth and sustainability in front of short-term gains. That means investing in the right people, resources, and technology upfront to flourish in the future.
- Personalization – No two businesses are exactly alike. Financial plans shouldn’t be either. A business succeeds when it has taken its market dynamics, business model, and organizational structure into consideration.
The Benefits of Automated Expense Management
An effective way to buttress these pillars of strategic financial management is to implement automated expense management into your processes. For instance, receipt collection and monthly expense report processes tend to be time consuming, error prone, and frustrating for both employees and accountants. Automated expense management is capable of handling these tasks faster and with more accuracy. Such a simple optimization can help you make better use of your accounting team’s talents and accelerate your growth.
Expense automation improves your financial management strategy by:
- Increasing your financial visibility
- Streamlining the accounting process
- Reducing human error
- Combating fraud
Increased Financial Visibility
Having full, real-time visibility of your company expenses is essential to eliminating unnecessary spending and staying on your small business budget. Observing your business’s finances from the top-down allows you to:
- Better identify areas of overspending and streamlining opportunities.
- Prevent policy violations or fraud from slipping through the cracks.
- Make informed financial decisions, faster.
- Be more prepared for tax season.
- Make more accurate predictions of company growth.
- Better analyze your financial performance.
Periodic visibility, like waiting until the month’s or quarter’s end, won’t help you identify real-time cash flow issues that could seriously hurt your business. For that reason, complete financial visibility is not only a benefit of expense automation, but a requirement for financial success. As a small business owner, a dollar of your business’ money wasted is a dollar of your own money wasted.
Ignorance is bliss. But as a business owner, bliss won’t improve your bottom line.
For both small and large businesses alike, the more you grow, the more you spend. And the more you spend, the more necessary it is to track that spending through smart budgeting practices.
Expense tracking and management make for a time-intensive and error-fraught process when done manually. But automated expense management makes bookkeeping a breeze by:
- Drastically cutting the reconciliation process for accountants.
- Accelerating approval and reimbursement.
- Reducing time wasted in addressing errors or lags in expense report submission.
- Integrating reimbursements with expense tracking and reporting.
- Providing management with greater visibility over company expenses and far more control over spending in the first place.
Reduction in Human Error
Automated expense management’s benefits are doubled when you consider the downsides of manual expense management: human error, inefficiency, and lag time. Your small business expense management strategy can die from a thousand paper cuts, buried under piles of mismatched receipts and erroneous expense reports. To put this in perspective, a report by GBTA showed that, on average, 19% of expense reports contain errors.
Expense management software mitigates these errors and inefficiencies by:
- Minimizing the use of paper receipts and reducing paperwork-related errors.
- Automatically prompting employees for their receipt and instantly matching it with the correct purchase, eliminating reconciliation lag and fraud.
- Saving accountants time by speeding up the approvals and validation process, and eliminating the need to chase down employees when reconciling expense reports. Accountants, on average, spend 20 minutes on each expense report. Given that almost one-in-five reports contain errors, and that it takes about 18 minutes to correct that error, you can quickly see how time spent on repetitive, manual tasks adds up each month.
- Putting a stop to repetitive manual processes, like data entry, thus increasing productivity and efficiency, and eliminating clerical mistakes.
Reduction in Fraud
While you’re confident in your employees, you don’t want to bank on benefit of the doubt when it comes to your business’s finances. Expense report fraud is as easy to commit as it is to miss when your system relies on manual processes.
Here are the four common types of expense report fraud you should know about:
- Duplicated claims – Some fraudulent claims are simply the same report submitted multiple times (sometimes with intent to deceive and other times by accident).
- Inflated expense claims – Paper or digital receipt and invoices can be altered in the efforts to receive a larger reimbursement than was actually spent by the employee.
- Falsified claims – Employees may try submitting falsified checks, invoices, or receipts (or someone else’s receipts) in an effort to receive reimbursements for money they did not spend.
- Mischaracterized expenses – These include any expense reports requesting reimbursements for non-business expenses labeled as business expenses (like personal travel, gifts, or dining).
Automated expense management combats all of these fraud types by:
- Identifying and halting reimbursements for out-of-policy expenses.
- Instantly matching receipts to purchases, detecting any inflated, falsified, or mischaracterized claims.
- Cross-checking new claims with historical reporting data to catch duplicate reports.
Preventing fraud is not only essential to the integrity of your workforce, but to your business’s financial well-being. The Association of Certified Fraud Examiners notes that anti-fraud controls can detect these occurrences almost 50% faster, saving you thousands of dollars a year.
How Automated Expense Management Boosts Your Bottom Line
With faster, simple bookkeeping and a wider view of company finances, expense automation can significantly boost your savings and your bottom line to help you reach your financial goals
With greater access to historical spending data and real-time access to company finances, expense management software allows businesses to:
- Avoid overpaying vendors by finding more affordable alternatives and better deals.
- Use their workforce more efficiently by taking their talent away from menial, manual processes, and putting them on value creating, growth-oriented work.
- Identify and eliminate redundant subscriptions, like on SaaS or other services.
- Access historical expense reports to automatically detect fraudulent claims.
- Track categorical and department spending in real time.
By making such sweeping improvements on employee dynamics, spending controls, and visibility, automated expense management enforces the three pillars of financial management.
Elevate Your Financial Management With Ramp
Ramp’s automated expense management can help you elevate your financial management, by allowing your team to:
- View your finances clearly and in real time, enabling real-time decision making
- Speed up the accounting process, accelerating your month-end close process
- Eliminate manual bookkeeping processes, breathing new life into your accounting team
- Identify and combat expense report fraud, saving money and improving your workforce
And Ramp is the only corporate card program that integrates these benefits directly into your business card so you can meet your financial goals with ease.
With a built-in spend management platform (and a rewards system as simple as 1.5% cash back on everything), Ramp offers you convenience, squared. Talk to a Ramp expert to elevate your financial management game today.
ACFE. Executive Summary. https://www.acfe.com/rttn2016/about/executive-summary.aspx
Inside Small Business. Four types of expense report fraud to look out for. https://insidesmallbusiness.com.au/featured/four-types-of-expense-report-fraud-to-look-out-for