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Tracking expenses could be a critical task for business owners, as your expenditures inform your budget. Using automation tools to track expenses may provide a more transparent view of how money moves in and out of your business. Real-time analytics could help make it easier to identify spending trends and spot discrepancies, while providing data to help inform financial decisions.
Let's look at how automated expense reporting works in more detail and what it could do to help enhance your financial visibility.
What Is Expense Reporting?
Expense reporting is the process of documenting business expenses made by individual employees or a department over a specific time period. Reporting expenses could be a fundamental part of financial accounting, which refers to how you communicate details about your business's performance to outside parties.
Tracking and managing expenses using automated expense reports could help business owners:
- Develop accurate budgets and analyze spending across different expense categories.
- Identify potential opportunities for cost savings.
- Document expenses more accurately.
- Increase financial transparency and create a digital paper trail for internal spending audits.
- Reimburse employees in a timely manner.
- View spending trends on a monthly, quarterly, or annual basis to make projections for future periods.
What Is Automated Expense Reporting?
Automated expense reporting allows a business to track expenses using software to record the numbers. Specifically, expense report automation may facilitate the ability to:
- Categorize expenses as they're added, based on the spending tags you set.
- Route expenses that require review before approval to the appropriate individual or department.
- Reconcile expenses by matching captured transactions using optical character recognition (OCR) or extracting relevant data from emails.
How to Automate Expense Reports
Automated expense management doesn't have to be complicated. Here's how you could consider automating expense reports.
Choose a software program: To choose an automated expense reporting software program, you might consider things like how easily it could integrate with the rest of your tech stack, how it captures expense information, how much it costs, and what level of support is provided. Also, you might want to consider the level of customization available for expense controls, workflows, and approvals.
Implement the software: Once you select a program, you could install it and integrate it with your accounting program. You could then add company cards to the expense tracking software, establish your expense policy, and allow access for employees who are required to report expenses through the program.
Categorize expenses: To help reconcile and route expenses, your reporting tool relies on categories and tags. Expense reporting software may include some preselected categories or tags, as well as giving you room to add your own.
Onboard your staff: Employees should understand how to log in to the program and report expenses. If onboarding support isn't provided by the software developer, you may want to consider creating an orientation email or presentation to help guide your team.
Build workflows: Approval workflows could allow expenses to be green-lit without additional oversight from you or a member of your team. You could determine which expenses may be approved automatically and which ones might require further approval before they can be processed.
The Challenges of Manual Expense Reporting
Automated expense reports could help save business owners time and help them avoid some of the limitations of manual reporting.
For example, inconsistencies resulting from human error may take additional time to correct. If an error goes undetected, it could affect budget projections or only provide a partial snapshot of a company's financial health.
Manual Expense Reporting vs. Automation Benefits
Manual and automated expense reporting have a shared goal, which is keeping you informed about your company's financials.
Here's how the two compare, side-by-side.
|
Manual Expense Reporting |
Automated Expense Reporting |
|---|---|---|
Functionality |
Expenses are categorized and coded manually, which could add time to the reporting process. |
Expenses are categorized and sorted as they're entered and reconciled automatically. |
Recordkeeping |
Paper receipts, which run the risk of being lost or damaged, are collected, recorded, and stored. |
Receipts may be uploaded to the software program and matched against captured transactions, without the need for a physical paper trail. |
Portability |
Multiple signatures may be required for expense approval, and receipts may need to be routed through multiple channels for recordkeeping. |
Expenses may be recorded and approved from anywhere that has internet service, and employees may upload receipts through a mobile app. |
Report Generation |
Compiling an expense report manually may take several days, or even weeks, if you need to track down missing receipts. |
Automated software could generate reports in real-time, allowing you to make on-the-spot financial decisions for your business. |
Efficiency |
Inefficient expense reporting might have tangible and intangible costs, including the potential for increased fraud, less financial transparency, and greater employee dissatisfaction with the reporting process. |
Automated expense reporting could streamline what may be a cumbersome process. |
Benefits of Automated Expense Reports
If you're on the fence about whether automated expense reporting makes sense for your company, you might want to consider the potential gains from implementing it, such as:
- Improved accuracy: Automating expense reporting may reduce the risk of human error. Expense software could detect inaccuracies and notify you of an issue that needs to be addressed.
- Faster reimbursements: Automation could reduce wait times for reimbursements, potentially enabling more prompt payments to employees.
- Increased productivity: Moving to an automated expense reporting system could allow employees to potentially focus less on managing business expenses and more on core responsibilities.
- Actionable insights: Automated expense tracking software could help you dig deeper into the numbers to better understand your company's spending patterns. You could use these insights to help identify opportunities to adjust spending and potentially redirect some of those funds to growth projects or investments.
- Fraud reduction: Automating expense reporting could make it more difficult for employees to submit fraudulent expense reports.
Implementing Automated Expense Reporting
Introducing automated expense reporting might require the development of certain policies and procedures and communicating them to your team. As you navigate how to automate expense reports for your business, here are some best practices to consider.
- Consider using wording that's easy to understand when developing policies, and avoid confusing jargon.
- Consider establishing detailed spending controls and approval requirements for transactions.
- Try to choose expense categories that accurately reflect how your company spends money.
- Consider sharing access to expense tracking with relevant members of your team who could benefit from these insights.
- Consider monitoring expense data in real time and make adjustments to spending thresholds or controls as needed.
You may also consider asking your employees for feedback on how you could improve the expense reporting process after they have put the software into practice.
Expense Management Expertise
Automating expense reporting could help you better understand your enterprise's financial ecosystem and how to maximize it. However, expense management goes beyond automated software programs.
Automated Expense Reporting FAQs
What is expense reporting?
Expense reporting is the capture of business expenses made by employees and departments. Accurate reporting could be critical for financial accounting as well as budgeting.
What is automated expense reporting?
Automated expense reporting is the capture, recording, and reconciliation of business expenditures using a software program. Company cards are linked to the program, and as purchases are made, those expenses are automatically reported in real time.
How could automated expense reporting benefit businesses?
Expense report automation may benefit businesses by saving them time, since there's no need to enter expenses manually. Automating could help also identify savings opportunities or reduce instances of fraud. You might benefit from more accurate reporting, with real-time insights to aid financial decision-making.
What’s the difference between manual and automated expense reporting?
Manual expense reporting requires expenses to be entered and reconciled by hand, which could increase the risk of human error and potentially delay reimbursements to employees. Automated reporting captures expenses automatically, helping to improve accuracy in reporting and speed up reimbursements.
How do you automate expense reports?
To automate expense reports you might first consider choosing an expense tracking software and sync it with your accounting software. The process might then entail setting spending controls and policies and granting employees who report expenses access to the software, either through a desktop portal or mobile app. To record expenses, you could link company cards to the software and set your expense categories.
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