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Expense reporting is essential for any business to manage and track the expenses related to their workforce. It can be as basic as tracking existing expenses to more complex activities like calculating taxes and deductions. However, expense reporting can be burdensome if the latest technologies and automation are not used.
Managing expense reports is a lot more difficult when done in silos. Your employees may lose out on time, while your business will have to compromise with revenue. If you are yet to make the right use of technology for your expense reporting, it’s probably time to rethink.
This article explores the importance of automated expense reporting for global businesses. We further help you understand the hallmarks of reliable expense tracking and reporting software.
The Importance of Expense Reporting
An expense report includes all costs incurred by the employee while on the job, organized by type of expense. Finance teams need to verify and process payments after cross-checking and approving the claims. For example, if an employee visits a foreign country for a crucial business meeting, everything from flight tickets to hotel accommodation and food costs will become a part of the expense report.
When you have an organized report with an itemized expense description, you can easily classify expenses based on tax returns—calculating taxes appropriately and meeting the compliance norms also become seamless.
Using expense reports, you will also get better insights into tracking your budgets and corresponding expenses. If there are instances of overspending or fraud, you can detect them in time to avoid losses. On average, organizations with 100+ employees face expense fraud of around $30,000 per year. Besides organizational benefits, expense reporting also helps you reimburse your employees swiftly.
Traditional Expense Reporting Challenges
Traditional expense reporting is a pain. It’s a hassle for both employees and accountants who may have to follow several manual steps.
For employees, the process of submitting expenses can be overwhelming. They have to remember to save all their receipts, and then keep them organized so they’re easy to locate at the end of the month. And once they’ve found them, they have to make copies—then fill out a form manually and submit it before their deadline to get reimbursed.
If that’s not enough of a headache, there is also the worry that those receipts will get lost in transit or will be accidentally thrown out! Then what? Your employees might lose the money they spent on that business trip or dinner with clients.
Accountants also don’t enjoy traditional expense reporting. It requires a lot of manual work: going through each employee’s receipts and then making sure everything adds up correctly and finally, confirming that each expense gets approved by management.
Accountants also have to manually enter each receipt into the company’s accounting system and hope that nothing gets lost in transit. As you might imagine, this process is inefficient and is prone to errors It can cause headaches for your accountant and the rest of your staff.
Here are some other challenges associated with traditional expense reporting systems.
- Data errors in expense reports
- Fake claims for reimbursements by employees
- Compromised productivity due to redundancy
- Bulk processing of expenses closer to deadlines
- Failure to meet expense compliance norms
How Automation Helps Overcome Traditional Expense Reporting Challenges
If you’re serious about growing your business, there are several good reasons to automate your expense reporting. To start with, automation saves time and money. Automating expense reports can reduce menial tasks and improve the productivity of your employees.
Automation also promotes transparency as all the information will be in one place and remain accessible to everyone. There’s no need for software that only allows specific people to see certain records. Plus, you can ensure everyone’s on the same page about where your money is going and why.
Finally, an automated system means fewer mistakes. It will even detect duplicate expenses and ensure accurate calculation of VAT taxes. You will not have to worry about making errors in your taxes or paying more than you owe.
When it comes to your employees, they can submit expense reports without manual effort. They will not have to collate each expense receipt and add the details manually. You can also enforce related expense policies to streamline operations for all the stakeholders involved in the process.
Global Businesses and Related Expense Reporting Challenges
Modern expense management and reporting systems help businesses overcome challenges related to reimbursements. However, there can be unique challenges when an organization has branch offices spread globally. These are due to local regulations and norms that differ with each region. Let’s look at those challenges in detail.
Accommodating expenses accurately requires finance teams to check multiple systems and dashboards. The current technology may not remain adept at handling every request. There could also be a lack of common and standard features available for everyone across the organization.
Non-compliance With Policies
Expense systems that do not offer seamless reporting and approvals can lead to non-compliance with standard policies. For example, there could be issues due to currency deviations, accounting systems, etc. Continuous occurrence of this problem will lead to compromised expense systems and compliances.
Lack of Spending Visibility
Your budgets can become muddled if you do not have visibility on the amount already spent by your employees on various expenses. A standard expense reporting system will offer enough insights for data-driven decision-making. It will reduce the time you need to make critical decisions and improve productivity.
Best Practices to Streamline Expense Reporting for Global Businesses
It can be troublesome to track each expense report, especially if you have offices spanning across the globe with thousands of employees. Here are some best practices to streamline your expense reporting operations.
Create the Right Hierarchy
Hierarchies in expense reports are essential to ensure they go through in the desired manner. For example, some managers at lower levels may not go into details when authorizing the expenditures of their subordinates. This could unknowingly lead to policy violations. If there are no higher-level managers to approve expenses, there could also be other complications.
Have Audit Trails
Audit trails are helpful for finance teams of global businesses. Expenses may end up violating policies if your finance teams cannot trace them adequately. Having localized operating procedures based on the norms and policies of particular regions can also help enforce policy compliance.
Make Good Use of Data
Create systems where you can extract insights from expense records. This will help you create better policies and streamline operations in the long term. For example, data insights can help you identify spending habits, instances of policy violations, and much more.
Create Customized Policies
A one-size-fits-all approach will not work across the different territories of your organization. You will have to create customized policies that suit the regulations and norms of particular regions.
Automation helps you improve the productivity of your finance team by reducing menial tasks. Most modern expense reporting systems come with advanced automation capabilities. Automating the process will also help you detect non-compliance in real-time. It will be much better than identifying issues after approving and releasing payments to your employees.
Policies for Expense Reporting for Global Businesses
Now could be a good time to start if you do not already have formal policies in place that cover your entire organization. Keep in mind that you will have to define policies for each region separately based on local laws and regulations. Here are some best practices to keep in mind when drafting such policies.
- Expense rules may vary based on the employee designations, line items, departments, etc. These aspects should be a part of your policy based on local regulations.
- The combined policy may have certain norms that apply to everyone, while some remain region-specific. Try to segregate them or have clear distinctions to avoid confusion.
- Different regions will also necessitate different taxes on expenses. Tax calculations by your finance team should be in line with local regulations.
- It is advisable to define the type of expenditures the company will reimburse. Similarly, you should also clarify what constitutes taxable income. Conducting workshops to educate your employees on expenses and related taxes will help.
- Your expense reporting system should support changes to your existing operations. For example, you may redefine or add new clauses to your expense policy. The software should be able to accept the changes.
Automate Your Expense Reporting System With Replicon
Replicon provides a comprehensive expense reporting and tracking system designed for global businesses. You can seamlessly manage reimbursements and project billing on a single platform. Here’s how Replicon will help.
Configurable Policies for Time and Expenses
You can create custom rules to track employee working hours, backed by validation rules. You can set up a flexible rate-based pay system when it comes to managing expenses. Replicon’s automated tax calculation mechanism further simplifies the job of your finance team.
Simplified Time and Expense Tracking
Replicon’s mobile timesheet feature allows your employees to easily submit reports, even on the go. You can define supported expense types on a project basis, to manage and track expenses seamlessly. Replicon’s receipt upload option helps prevent information loss. With Replicon, you can also get better visibility into actual spending and budget allocations.
Your employees can route their expense reports to the right authority in real-time. Approval managers receive automated notifications within a defined approval sequence that can be customized per user. Approval workflows are configurable based on your specific needs. Alerts and notifications help each stakeholder in the process remain informed about expense activities.
You can define customer and project-specific expenditures like flight, hotel, and food costs. Tracking actual expenses against the budgeted allocation will ensure things don’t go overboard. The real-time visibility helps stakeholders remain updated at all times.
You can integrate with other time and expense-related systems to get advanced functionalities. With Replicon, tracking time, submitting expenses, and processing time and expenses will be a smooth activity for your finance team. You can connect Replicon’s expense reporting system with project management, ERP, and accounting tools.
The expense tracker gives you real-time visibility into your project expenses and reimbursements. Dashboards let you explore expense details to get a better overview of your projects. Expense-related metrics enable data-driven decision-making for improved results.
Replicon’s expense reporting system comes with a host of benefits specially designed to suit the needs of modern-day global businesses. Our solutions are already helping finance teams ease their expense management workloads. With several advanced features packed into one reliable and robust software application, Replicon will be an answer to all your expense reporting woes.