Expense Management for Accounting Teams
How many accountants does it take to change a light bulb?
Well, how many did it take last year?
Groaner jokes aside, the kernel of truth is that the accounting team is the company’s compass, ensuring that financial records are accurate and regulatory compliance standards are met, so the business can work according to plan. Accountants and controllers create a clear, detailed record of a company’s financial past, which helps chart its future.
Or at least, that’s true when you get all the data you need. Unfortunately, inefficient systems or error-prone processes can leave the accounting team working to fill in the gaps. Expense management is a chronic challenge for many businesses. Implementing the right tools to streamline processes, add convenience, and reduce errors helps expense management flow smoothly from end to end.
Expense Management Payment Options
The payment method employees choose when they’re making purchases on-the-go affects how accountants work, too. Different options will make more sense for a smaller or larger business, carry different risk levels, and require different expense management processes after the fact. Here are some common options, and their advantages and disadvantages.
Having employees make their own purchases up front is a low-risk expense management solution that often appeals to small businesses. When accountants process reimbursement receipts, they can cross-check details and spot any errors or issues.
Disadvantages of the reimbursement model include delays in processing receipts and getting the reimbursement to employees. Reimbursement can also be difficult to scale as a business grows — not all employees may have thousands of dollars available to book a long-haul flight and lengthy hotel stay.
Some businesses allocate a petty cash fund for various expenses according to the budget. Cash is convenient because there’s no interest or credit risk attached. It can be easy for small businesses to implement.
The downside is that cash is the least transparent spending method. Overspending or fraudulence is a risk. Cash also doesn’t work for remote workers, which is especially relevant as many businesses have transitioned to remote work due to the pandemic.
A corporate credit card can bear rewards for the company, both in terms of overall creditworthiness and a specific credit provider’s rewards program. Using plastic also improves the expense tracking process over cash. Simply log into the account to view expense activity. Credit is also often the easiest option for businesses with a high volume of expenses.
Some downsides include high interest rates and fees if the company fails to pay on time and in full each payment period. Certain credit cards may not be the best option for some small businesses. It’s also not realistic to expect all expenses to be charged to a single corporate card account.
Solutions for Top Expense Management Challenges
Software solutions can ease the burden of expense management. Accountants and controllers can save time and reduce errors. Here are a few top problems in expense management, and what to look for in a software solution to solve them.
Expense category mistakes
One of the most important roles the accounting team fills is maintaining clear, organized records. Accurate books mean better financial reporting and regulatory compliance. One problem is that a lot of people aren’t great at categorizing expenses correctly. Going back through employee expense sheets to correct errors is a huge pain for a controller or senior accountant with plenty of other work on their desk.
Expense software solutions work best for the company when they’re set up to help employees prepare expense reports accurately the first time. TravelBank allows companies to customize categories according to their own accounting guidelines and general ledger.
At the end of a business lunch, it’s easy for workers to leave their copy of the receipt behind. Some people even have a (usually mistaken) impression that their supervisors are asking for an itemized receipt to make sure they’re not dining too extravagantly on company money.
The accounting team doesn’t care what people are eating. Itemized expenses make IRS compliance easier, whether the line item is a burger or lobster. It’s possible the IRS won’t care about a business trip where room service meals are lumped in with the total hotel bill, but it’s also possible that the combo expense could get flagged. So thorough, itemized expense records can sometimes make the difference for businesses.
In the worst-case scenario, missing records like receipts could result in an audit, with all the hassle and stress that comes with it.
One easy solution is doing away with the need to hang onto every receipt slip. Most people are within arm’s reach of their phone at any given time. Expense management software with a receipt capture feature, like TravelBank, can process the details from a photograph, eliminating the need to store and organize paper receipts.
Poor software integration
Let’s face it: Controllers have a lot to juggle, and that workload isn’t likely to lighten anytime soon. When you’re facing a constant series of deadlines and busy schedules, the last thing you need is a new software solution that promises to make your life easier—only after you’ve learned an entirely new system and trained the rest of your team. Accounting professionals don’t have the luxury of time to pause the usual stream of work to overhaul systems.
Look for expense management software that offers integrations with other programs you’re used to (e.g., Quickbooks, Bill.com, NetSuite). This streamlines the process of incorporating the new tool with your favorite programs. Other important features are automation and an easy user interface.
TravelBank integrates with your general ledger in a two-way sync, so you can share critical updates between platforms. An employee directory and easy approval routing help workers across departments find what they need. Supervisors can log in and greenlight travel plans, finance professionals can pull the reports they need, and the accounting team can get data flowing in in a timely fashion. Software that offers improved visibility into business spend helps you make sure operations are proceeding according to plan.
Expense management headaches don’t need to follow you into 2021. The right system can make documenting receipts, updating expense categories, and preparing reports faster and easier.