Expense Management: Trading Paper For Best Practices
Did you know that more than 2 out of 3 American businesses still mail receipts to their accounting departments? It doesn’t make for fast or reliable expense management, but it’s been ingrained in established business processes for so long, some companies are reluctant to put aside what they know for what’s new…even if what they currently have in place isn’t working very well. Businesses rely on a lot of luck when it comes to paper-based expense management, whether it’s hoping that fast fingers don’t key an extra zero or that those suitcases full of receipts make it back from Tucson or Dubai or Hong Kong. There’s plenty of risk involved and not much reward, given that processing manual expense reports tends to cost several times more than their automated counterparts. Spreadsheets and stapled receipts create a convoluted mess in an area that needs to be closely monitored: travel & expense.
In a recent CFO Magazine article, there was an excellent (and typical) example of a company trapped by its own outdated expense management: a CFO reported that his engineers were losing large amounts of productive time in order to comply with company expense policy, which required them to enter expenses into paper-based logs, keep track of receipts, mail them to accounting and fulfill several other steps before the reports began the slow trek through the department and a lengthy reimbursement cycle. Most companies wouldn’t appreciate the idea of paying engineers $60 per hour to sort through a pile of receipts, and this company was no exception.
The complete lack of visibility makes it difficult to accurately track where and how that T&E budget is being spent. Information is perpetually out-of-date, which makes matters interesting (and not in a fun way) should the CFO ever have to justify the expenditures to the IRS. Research firms such as Gartner and Aberdeen have repeatedly extolled the virtues of expense management software, especially when compared to the manual alternative, but some businesses remain reluctant to make the switch. Expense reporting remains locked in another century for companies that are slow to adapt, and in the end, it’s hurting their ability to manage corporate finances and compete in an increasingly automated world.
Any time there is a transition between “the old way” and “the new way,” there is adjustment, a learning curve…growing pains, if you will. Growth is necessary; stagnant business is not profitable business, which means making that leap from manual to automated business processes is becoming increasingly vital, especially for expense management.
Basically, it comes down to the conundrum faced by the CFO mentioned in the article: would you want your engineers spending their valuable time tracking down receipts or turning wrenches?
For that CFO, at least, the answer was to trade the paper for the wrenches.