The Integral March 2023

The Expense Management Challenge

Expense reimbursements are always considered a challenge due to the importance attached. Reimbursing employees requires accounting teams to sift through piles of receipts, audit them and approve the expense reports.

If the volume of reimbursements are high, the process is prone to becoming inefficient. Another problem will be delays in payments, this is can result in employee being displeased.

Why expense reimbursements matter?

According to Association of Certified Fraud Examiners (ACFE), 15% of business fraud stems from reimbursements with a median annual loss of $26,000. Organizations cannot allow reimbursements to go overlooked–otherwise, they risk losing thousands of dollars to expense fraud.

If you’re looking for an easier way to manage this process while still maintaining the integrity of your data and expense management operations, here are some concrete methods for simplifying reimbursements for your team.

Identify Reimbursable Expenses

By setting clear boundaries around what is and isn’t considered?a reimbursable expense, you’re much less likely to have employees submitting irrelevant reimbursement requests. Here are some common reimbursable expense categories:

1. Travel and accommodation
2. Meals and entertainment
3. Communication and office supplies
4. Medical reimbursements

Implement an effective reimbursement policy

A policy needs to be comprehensive. Since, expense are incurred by employees across departments, a policy must be evolved after due consultations with all departments. An ideal policy must contain:

1. Expenses which can be reimbursed
2. Spending limits based on job roles
3. When & how to submit claims
4. Process for approving the claims

It is important to note that recording all the expenses incurred is vital on time as they are tax deductible. Needless, to say they have to be submitted within timelines.

Employees in the organization must have easy access to the policy. Such policies must be drafted in simple languages and must be easy to read.

How to facilitate payments?

The end result of a reimbursement process is the payout to the employees. Direct deposits to the employee’s bank account of approved reimbursements are very efficient.

Another way to handle payments would be use expense cards. These cards can be issued to frequent spenders. These cards which are preloaded can be used to track expenses.

One must take care to ensure that reimbursements must not be part of the salary slips. This will save taxes for the employees.

How to implement an expense reimbursement process?

An expense process must ensure:

1. Expense policy is adhered
2. Easy submission of claims
3. Automation of pre & post travel approvals
4. Policy violations flagged
5. The audit test is passed
6. Reduction in Frauds
7. Processing of large claims

These can be achieved by using an expense management tool. A tool like,?Zoho Expense, can automate the claim submissions using workflows regardless of the volume.

Automating Expense Reimbursements:

With digitization, you can re-engineer the way expense reimbursement is handled in your firm and better manage your finances.

Firstly, it provides employees the ability to capture and record an expense as and when it’s incurred via a mobile app. Your employees no longer have to save receipts and wait until the business trip is completed to enter their expenses manually. Thanks to the defined workflows, each expense report is automatically forwarded to the approver, validated, and processed within minutes.

As for the finance team, any expense report submitted to them would have already been thoroughly audited by the software to fish out policy violations, notifying employees of any flags immediately. Also, the software provides your finance team with digital copies of relevant documents as well as notifications on approvals and deadlines to ensure they don’t miss out any report.

Impact on accounting

Despite being a routine accounting task, expense reimbursement has a massive impact on your P&L. Finance controllers must ensure that all the expense claims are submitted on time, provisions are made for payments. Not just that, accounting teams must ensure that employees are paid on time.

An effective expense management tool must minimize errors, cut overspending or overpayment at its source, and provide insights into discretionary spending to improve your firm’s productivity, cash flow, and overall financial health.

At Integrabooks, our advisors will help with expense management. Let us you know your thoughts. Please drop a line?here.

Finance & Accounting-are they distinct?

Yes. Finance and accounting are two distinct but closely related fields that are essential for managing and understanding financial information in an organization.

Accounting is the process of recording and reporting financial transactions of a business. Accountants prepare financial statements, such as balance sheets, income statements, and cash flow statements. These are reports that provide information about the financial health and performance of a company.

Accounting also involves maintaining records of financial transactions, such as accounts payable, accounts receivable, and general ledger accounts.

Finance, on the other hand, is the management of money. Financial decisions include fund raising, investing in assets and managing risks. Finance also includes financial planning, forecasting, and budgeting.

In summary, accounting is primarily concerned with the recording and reporting of financial transactions, while finance is focused on the management of financial resources and investments.

There is always an overlap as accounting data is used in financial analysis and decision making.

Slacker's Guide to Accounting

Doing your books isn’t exactly a fun activity. You could be a slacker or a hardworking person, but there are definitely other entertaining things for you to do. So, we have come up with a slackers guide to bookkeeping.

Use technology to make it easier

Keeping track of receipts/bills is hard. You are likely to lose most of them. So use some simple tools which will make your life easy. Try using:

Scanning Tools: A great way to digitize your receipts. Take a snap and store them forever. Also, don’t forget to send it to your accountant.

Expense Management Tools: Lets you create expenses, store receipts. This also has an optical scanner for scanning receipts that you upload. You can skip entering details manually.?

De-clutter your business

Technology to the rescue again! Choose an accounting software to do the heavy lifting. Use automated workflows to send invoice reminders, get notified when a customer pays. Connect your bank accounts to auto-match receipts & payments with invoices. These will save a lot of time.

Separate your Business & Personal Expenses

Ancient wisdom says don’t mix business with pleasure. Therefore separate your business & personal expenses. For starters open a business bank account. Have all your business expenses & revenues in this account. You can always draw money from this account as salary or reimbursement.

Make it a Habit

In between all the fun you are having, take some time out to do bookkeeping. Bring all your smartness to fore at least once a week. Check for vital signs like cash flow, unpaid invoices & vendor bills, payroll and taxes.

Let?Integra Books?to do the heavy lifting. We will pair you with an expert and a software.?