Understanding the Process of Expense Management and Its Benefits

Any business’s finance department is central to its success. The responsibilities of this office are vital for the day to day activities of the firm. The management of all financial matters of the company including overseeing the expenses of every person associated with the business and making sure that every penny is accounted for is one of the biggest challenges the financial department face on the daily. To ensure a return on investment for the business, every expense must be checked and verified by this department and protect the company’s bottom line.

In many cases, small businesses perform their expense management tasks manually. This used to be the traditional way of doing expense management, but things are changing fast. Manual expense management use spreadsheets and other basic tools to track employee expenses, which can be overwhelming and inefficient because business grow and the number of employees increases. When this happens, manual employee expenses tracking methods become extremely hard to keep up with. If you are in the telecommunications business, there is a bunch of top telecom expense management companies offering this service at affordable rates.

Tasks Involved In the Expense Management Process

There are several tasks involved the business expense management process. Some of these tasks can be daunting, especially for bigger companies with an extensive employee base. The manual expenses management process includes the following tasks:

Recording Employee Expense Statements

Employees requesting reimbursement for business-related expense such as tuition expenses, relocation expenses, and business trips must do so via the submission of an individual expense report. This report must include both the header and record details of all expenses associated with the employee. Before the submission, the employee should verify the amounts indicated in the report including the general information.

Approval of the Expense Statements

Many organizations require the employee’s expense report to be approved by a supervisor or one of his/her superiors. At this stage, the report can either be accepted or rejected. If the report is rejected, the employee is supposed to revise and submit again. If it’s approved, the status of the report will be changed to indicate that’s it’s ready for audit before the reimbursement.

Audit

Not all expense reports are subject to audit, but when necessary, an auditor will go through the expense report comparing it against provided receipts to confirm that the information corresponds. Just like supervisors or another superior who approved the report, the auditor can approve or reject the report if the information does not add up.

The Actual Reimbursement

If an employee’s expense report passes all the stages above, it’s ready to reimbursement. Companies use different methods to reimburse their employees. The employee will be notified once their request is processed.

Some businesses choose to use an expense management software to streamline their expense management processes. There are some benefits of using this kind of software, but that will depend on the size of the firm and the software you choose. If your company’s expense management process is increasingly becoming labor intensive, you can opt for a software or an expense management company and ease your staff’s burden.