11 Key Benefits of Using A Expense Management Software
An organization’s finance department is often responsible for managing corporate spending including creating budgets, tracking expenses, and ensuring compliance with company policies. With the advent of expense management software, the tasks of the finance team have become easier.
As the name implies, expense management software is a tool used to manage expenses. It is designed to help businesses keep track of their spending, budget for future expenses, and make informed decisions about where to allocate their resources.
The software allows processing, paying and auditing the expenses that an employee makes on business trips, hotels, food, transportation and shipping of work-related items. Businesses can learn about opportunities to save their costs and limit over-spending by using an effective expense management software.
Let’s discuss some of the most common and impactful benefits that this type of software can provide for businesses:
In the contemporary business era, the need to streamline and optimize organizational processes has become more pressing than ever before. One of the most important aspects of business operations is effective management of expenses, which can directly influence the company’s bottom line.
The better the company’s future prospects, the better will be the chances of investors’ putting in their money. A expense management software can be a powerful tool in achieving this goal. The best travel & expense software will provide a number of advantages for businesses.
1) Increased Efficiency and Productivity
An expense management software can help businesses to keep track of their spending in a more efficient and organized manner. Having all of the information about expenses in one place can save time and make it easier for businesses to find and correct errors. This can lead to increased productivity as businesses will be able to better utilize their resources.
If there is no expense management system, receipts and invoices will be processed manually which is a mundane and time-consuming task. Accountants have to manually read rules and regulations to see if any policy is violated. Using bright minds to perform monotonous tasks is a waste of resources, thus a business can never become efficient in this manner.
2) Improved Decision Making
With a expense management software, businesses will have a clear picture of their spending patterns. Information related to the expenditure can be used to negotiate better rates with vendors and suppliers. The information can be used to make informed decisions about where to allocate resources.
Imagine getting pictorial representations of your expenses instead of long pages of numbers. A typical expense management software has a dashboard that includes charts that provide visibility into the spending patterns of businesses. Businesses can use the information to improve transparency and communication with stakeholders, thus making smarter business decisions.
3) Reduced Costs
An expense management software reduces costs in a couple of ways:
Businesses are able to identify areas where they are overspending and take steps to correct it. Businesses can use the software to analyze their spending patterns and thus find ways to save money on future expenses. For instance, a software will be able to identify exactly if employees book expensive hotels on business trips. Such instances of overspending can be reduced leading to efficient budget allocation.
Reduces processing costs
Working on spreadsheets means hiring more people adding to the company’s expenses. Additionally, working without a software involves manually processing invoices and requests which means a higher processing cost. Automating expense solutions can reduce such expenses significantly.
4) Prevention of fraud
According to the Association of Certified Fraud Examiners (ACFE), over $4.7 trillion is lost to occupational fraud every year. Since most of the corporate expenditure is incurred outside the office premises, it is very difficult to keep track of whether the expenses were actually relevant to achieving a company’s goals. With a manual system, it is possible to workaround corporate policies and commit fraud.
An example of a fraud is of an employee who may be doing personal expenses on business trips and billing the invoices to the company. It becomes important to ensure such activities do not take place. Information from an expense management system can be used to improve internal controls and prevent fraud.
5) Improved Cash Flow
The main purpose of an expense management software is to help cut down your expenses and improve the revenue, which automatically improves the cash flow of a company. Businesses can use the software to track spending in real-time and take corrective action if necessary.
A typical expense management system allows accounting and cost tracking which can be used alongside an enterprise resource planning (ERP) software to get a holistic view of all business expenditure. An expense management software can also be used as a stand-alone tool to better forecast a firm’s future expenses and plan for them accordingly.
6) Enhanced Reporting
A expense management software includes enhanced reporting capabilities such as categorization of reports according to each employee and project. Being able to generate reports that include detailed information about their expenses simplifies many aspects of the business. Businesses can also use the software to create custom reports that meet their specific needs.
Additionally, the software also helps find employees that spend the most and the least. Companies can then offer incentives to employees that have lesser spending. Enhanced reporting also allows identifying where a business earns the most discounts, so future purchases can be made accordingly.
7) Greater Flexibility
An expense management software can be customized to meet the specific needs of businesses. The software also allows the flexibility of using different cards that can be used to make purchases. The cards can be authorized to be used at particular vendors and for specific purposes.
Insights about amount spent and discounts received allow a better management of a company’s funds. Additionally, businesses can use the software to integrate with other systems which brings us to our next point.
8) Integration with other software
An expense management software is designed to integrate with other business applications such as accounting software, human resource software, and customer relationship management software. This allows businesses to automate their expense claims and reduces the need for manual data entry.
Integrating with other business tools such as Zoom, Slack and BambooHR makes business processes fairly simple.
A business that has its daily processes simplified has the most chances to scale. An expense management software helps make the processes streamlined so it can provide businesses with the ability to grow. As the business size increases, the software will be able to add users and functionality as needed.
As processes become simpler, employees are able to focus their time and efforts on important tasks instead of wasting time on menial tasks such as processing invoices. Efficiency in the business paves way for more profits that makes scalability a feasible option.
10) Increased Security
A travel & expense software provides businesses with a centralized system where they are able to store their data in a secure environment. Authorized personnel can use the software to set permissions and access controls helping prevent data breaches and unauthorized access to company information. The software also helps businesses to stay compliant with data privacy regulations so employees do not have to worry about the security of their personal data.
11) Improved Compliance
An expense management software can include the rules of Internal Revenue Services to allow businesses to meet compliance requirements. Businesses will not only be able to track their expenses, but also double check from the documentation in a more efficient and organized manner. The software can also be used to create reports that show compliance requirements are met.
The process of a company audit is usually stressful and sometimes overwhelming. An expense management software can help to take some of the burden off of businesses by providing them with the documentation they need to complete the audit.
Not only does it allow compliance with different tax agencies, but also allows copies of reports to be easily generated at the time of a company audit.
Summing up the benefits of a expense management software
A business needs to have a software that can provide important insights into spending patterns and help stakeholders and managers to make informed decisions about where to allocate their resources. A expense management software can help businesses to improve their efficiency and productivity, make better decisions, reduce their costs and prevent fraud. In addition to that, the cash flows of a business improve as expenses are reduced.
Employees are able to use a centralized system that includes everything from expense tracking, approvals, managing corporate travel, to clarity in understanding company policies. Spend management solutions offer a high degree of transparency and accountability with features like real-time alerts, notifications, and detailed analytics.
Greater flexibility, integration with other important business tools, ease of following compliances and increased security are some other key benefits. Lastly, the software also makes the business processes smooth so there is a higher chance of scalability of the business.