Expense management plays a vital role in a better business operation as a whole. The main goal of every businesses is practically to make money, thus, the way it spends must also be regulated favorably. However, expense management is not a single chunk. Expense management is divided in to three categories: Telecom, Travel and Technology expense management. These three categories all vary in terms of management knowledge, expense policies and more.
This article provides a detailed run-through of the three expense management categories and its importance. This article also includes some challenges embodied within each expense management branches. At the end of this article, you will grasp the importance of using expense management software in managing corporate expenses.
Telecom Expense Management
Telecom expense management refers to the management of telecommunication tools fees (wired or wireless). Telephone is a staple to any business or organization since the recent past; it is something that never gets overlaid by innovative means of communication and remains in every side table. Besides traditional telephones, Telecom also includes mobile plans given to employees to be used for business purposes.
Telecom incurred fee along with other corporate expenses is also something that contributes a fair amount to the overall corporate expense; thus, it is essential for every managers to take some planning and regulatory actions for this section. According to an article “How to Manage Telecom Expenses: Six Things Every CIO Should Know” from eweek.com, there are six challenges associated with telecom expense management:
- Telecom costs are the most knotty to manage – to be able to effectively manage telecom expenses, a company must hire someone who has enough knowledge. This knowledge involves technical, IT, telecom, corporate expense policy, telecom expense provider’s policy and pricing procedures; this overwhelming knowledge requirement is a continuing pain in the neck to many finance managers.
- Telecom expenditure is rising – though telecom providers continues to decline their service’s price, telecom expense increase among firms is a continuing challenge. The reason behind this is the never ending evolution of technology; the need for a bigger internet speed bandwidth contributes a lot to this problem.
- Inevitable billing errors – the primary reason for billing error is that telecom providers include complicated charges to the overall invoices the company receives. These charges include concrete assets such as lines and circuits and also some intangible ones.
- Wireless costs exceeds telecom imposed costs – nowadays, it is common for companies to provide mobile plans for their employees as part of their investment. The problem is, employees more often than not use company owned mobile devices not only for business but also for personal purposes, and thus, they potentially exceed their allowable mobile plan cost.
- CIO’s role – CIO stands for chief information officer. The main reason why telecom expense is complicated to manage is because it is decentralized. Decentralized expense decisions and limited lapses results to telecom overspending of about 10-25 percent of the fixed telecom allocated budget.
- Ignoring TEM costs – TEM programs are made to help companies save. If done properly could help give the benefits of: better decision making, expense validation, retrieval of billing errors, additional costs avoidance and automation of traditional manual processes.
When handling telecom expense management, expect the burdensome complex expense reports. To avoid all the problems listed below, it is recommended to invest in telecom expense management software; a kind of expense management tool that helps automate telecom expense reports to help managers and business owners keep track of their employee’s mobile expenses. Seeing expense management software reviews from CrowdReviews.com may help you in deciding which one to invest to.
Travel Expense Management
Travel is inevitable in any kind of business. It is one of company’s investments to improve overall profitability. There are various reasons why employees and managers travel; business meetings, contract negotiation, seminars, endorsements and many more. However, travel can be very expensive, therefore, the need for an excellent travel expense management is vital. Based on the article “Travel Expense Management: Beginner’s Guide” from RockerTrip.com below is the travel expense management process:
- Booking – most companies mandate their employees to book their travel to the corporate travel agency to monitor employee’s air travel cost.
- Submitting of expense reports –employees who book their tickets online automatically receives an electronic receipt which they can then submit as part of their travel expense report.
- Reimbursement – after expense report is reviewed, audited and approved, reimbursement phase occurs.
- Report – is the final process where the financial department and managers review the overall travel incurred expenses and do an expense report. The purpose of this phase is to see who is overspending and also see the ones who save, and do some changes in the corporate travel expense policy if needed.
Travel expense management is quite a tough job. Embodied in this job are a few challenges to face. Below is a list of possible obstacles in this field coming from an article of Finextra.com – The Five Challenges of Travel and Expense Management:
- Inaccurate data and poor visibility – the use of manual or automated system to record travel expenses, track and estimate travel costs may not be the finest solution to have accurate and real-time travel expense records. The lack of authentic expense data could potentially lead to mishandling of company resources particularly the budget allocated for travel.
- Inefficient procedures – it is very important to have an accurate and on time expense reports so that the employee can get its reimbursement on a timely manner. But 69% companies are reported to send paper based receipts as part of their expense report and 58% of organizations give employee reimbursements through Cheque. The problem with a paper-based expense processes is that it is difficult for employees to submit their expenses due to procedure delays, thus, making it an unsolvable headache for them.
- Expensive costs of processing – if a business are still using manual expense management, the average cost of every expense report is around $23, while those who started venturing in expense management automation spends around $7 per expense report. Expense management software reviews from CrowdReviews.com shows a good number of people who are delighted of the expense management software they purchased.
- Increasing travel expenses – managing the inflating overall travel cost is laborious for many big companies. The growing number of travel expenses also means the increase of workload for finance departments which then eventually results to another pile of processing cost. Furthermore, the lack of expense documentation accuracy and clarity makes it even more difficult to control misuse of company resources.
- Corporate travel policy enforcement – The lack of travel transactions visibility makes it difficult for manager to see if employees are abiding by the corporate travel policy or not. An inaccurate travel expense report greatly affects corporate policy compliance.
The key purpose of an employee traveling is for the betterment of the business; thus, the company should be there to support. However, these challenges could hinder all the good benefit corporate travel could give. Good news is the company can overcome all these hurdles through the aid of automated expense management systems. More and more companies started to venture in expense management software to ease the laborious job of managing travel expenses. It helps reduce processing costs, promote improved accuracy and better expense transparency.
Technology Expense Management
It’s safe to say that technology plays the biggest influence on how businesses go about their day to day operations. Technology plays a vital role in the industry of entrepreneurship. It has brought the innovations that made a lot of people’s job somewhat easier. The fact that technology comprises a bigger space in a business; it is therefore important to manage its operating costs.
Technology expense management refers to the management of technology inventory resources, contracts, invoices and billing. The main goal of this section is the creation of unified access to control technology related expenses. Unlike the two previous types of expense management, this one is easier to manage since technology assets are controlled by the management. It also relies within the management whether they would buy new technologies or not, thus, there is a higher if not a hundred percent expense visibility rate.
There you have it! Those are the three types of expense management that is present in many companies or organizations. All these types of corporate expenses are investments that should be returned back to the company, hopefully with an added profit.
A good expense management is the key to better resources utilization and compliance to business’ expense policy. If good management is paired with top expense management software, you get the best of both worlds.
If you want to know more about automated expense management services, check out expense management reviews from CrowdReviews.com to see evident feedback from users. Also, see which software made it as the top expense management software.
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