With so much competition in the market, it’s no surprise that more businesses are focusing on expanding their sales strategies. It is after all one of the main sources of revenue and growth. By increasing your customer base you can ensure more revenue for the company. But in order to do so, you would need to have more contact with prospects to increase conversion. This is where business trips become a necessity.
You or your sales representatives meet with customers to promote your brand and sell your products or services. However, in order to ensure that your company gains profit from these trips, you need to have an efficient expense management system. It’s a tool that can spell the difference between a successful and costly trip.
Expense Management Systems 101
What is expense management? How can expense management tools help your business become more profitable? According to Ascend CFO, a business solutions provider, expense management is the process of managing costs that is incurred by business operations. These costs include but are not limited to expenses spent on business trips such as accommodations, transportation and entertainment activities.
The process ensures that employee expenditure is tracked and recorded. Xpenditure, an expense management solution provider, lists the following as part of the manual process,
- Receipt information entered into a spreadsheet and then manually arranged in a chronological order.
- Employee matches receipts with charges on company issued credit cards. Bank accounts may also be used if the payments were drafts or cash.
- Expenses are reviewed by the employee to ensure that these meet company policies. Once done, the expense report is submitted for approval.
- Managers or Department Heads review expense reports. These are either approved or sent back for revision.
- Approved expense reports are forwarded to accounting to be processed.
The steps mentioned can be tedious and time consuming. And because of the multiple manual tasks involved, errors are inevitable. This is the reason why more and more companies are opting to automate the process.
Travel and expense management software can make the entire process simpler for you and your employees. Features offered include receipt tracking, expense report creation and payment integration. Filing expense reports are a lot easier with the right tools.
There are different types of business expense management software available in the market. You can opt for free versions available online with basic features. More sophisticated software can be purchased.
Roadblocks on the Road
To reduce errors, companies encourage employees to track their expenses while on the trip. However, this can prove to be quite challenging, especially with the other tasks such as meeting clients and updating proposals. Filing an expense report is sadly the last thing on their minds. Below are some of the common challenges that employees encounter while on the road.
- No Access to the Expense Management System – If the system used is not web based or available in other platforms, it can be hard for employees to access these outside of the office. What sales reps do instead is keep their receipts until such time when they are able to access the system.
- No Time to Update the Report – You send out your sales team to build a relationship with your prospects and turn them into customers. The revenue that you get from these closed sales help builds the company. In order to successfully engage customers, your sales folks need to use different techniques to make the former feel valued. These techniques can involve taking customers out to sports events, special dinners and other such entertaining activities. With such a busy schedule, it’s not surprising that most sales reps find it difficult to keep a record of their expenses. And when it’s time to file that report, they often have difficulty remembering everything that they had spent money on.
- Lost or Damaged Receipts – WIPFLi, a national accounting and consulting firm based in Wisconsin, cites receipts being lost or damaged as one of the top challenges in accurate expense reporting. Since receipts are required documentation that back up claims on expense reports, it can be disastrous when these are not available.
- Dreaded Admin Task – An article on Reuters discussed how employees perceive filing expense reports. It is a task that overwhelms certain individuals and one that they would rather not do. Sorting out receipts, typing out the expenses and cross checking credit card charges is a nightmare. This is one of the reasons expense reports are often filed late as employees put off doing them until the very last minute.
- Inconsistent Company Travel Policies Standard – Different companies have different policies when it comes to what can be claimed as a business expense when on a trip. These are often based on descriptions from the IRS. New sales reps on their first few trips may have difficulty remembering some details such as the amount that requires a receipt. While more seasoned reps may have developed a habit based on their previous expense report filings. They may have claimed receipts lost before which had been processed without any trouble. As a result, they are no longer concerned with ensuring that all their activities have the proper documentation. This can be create a costly culture as business trips can turn into all expense paid vacation trips if not managed properly.
The Domino Effect
The challenges employees have with managing and recording their expenses can have an impact on the company’s profitability. Below are some examples of how these inaccurate reports can affect the business.
- Bad Decision Making – The Houston Chronicle cites inaccurate expense reports to be one of the major factors of miscalculating profit. The results and impact can range from creating ineffective strategies to high taxability. Profit is the company’s way of measuring its success so not having the correct data can prove to be disastrous. If reported profits are low then it can affect the company’s value and impact operations as well as stakeholders share.
- Fraud – Whether it’s deliberate or merely a case of bad reporting, inaccurate reimbursement claims are considered fraudulent. In fact, Insperity, an HR consultant based in Texas, reports that 15% of business fraud occurs in expense reimbursement. And because it takes an average of 24 months for these claims to be discovered, employees feel that it is something they can easily get away with. While not all inaccurate claims may be attempts at fraud, investigating can use up resources that could otherwise have been allocated.
- Low Employee Morale – While it’s certainly true that some employees try to get away with spending company funds for personal activities, there are those who are simply confused. Your business travel policy may be long and difficult to understand which leads to numerous erroneous reports. Employees who are put under investigation for possible fraud or deceit may develop low morale. This leads to poor performance and eventually to low sales.
So, how do you avoid these problems?
Efficient Travel Companion
Transitioning to an automated expense report management tool can make the entire process less stressful and more efficient. Here are ways expense report management software can help you have worry free business trips.
- Integrated Payment – Top expense management software offer this feature to make your spending activities easier to track. It links credit card or bank accounts to the system for easier tracking. It keeps a record of what you or your sales force spend money on while meeting with clients. It eliminates the long and torturous process of having to input the information on clunky spreadsheets or outdated software.
- Receipt Tracking – Receipts seem to have a way of getting lost despite careful attempts to keep them stacked safely away. Losing receipts on a business trip can be quite a stressful experience, especially if it’s for an activity that cost quite a lot of money. Without any documentation of how the funds were spent, filing that expense report will literally be a nightmare. With this feature offered by expense management software, the receipts can be scanned and stored in the system. Employees can use their mobile phones or tablet to scan these as soon as they can. No more waiting to arrange them in chronological order and scanning them in the office.
- Itemized Expense Report Creation – The manual process discussed earlier mentioned a step where the employee would need to create their expense reports and match it to the charges on the card or bank account. With this feature and the integrated payment, employees no longer need to worry about overlooking any of the expenses. The report is automatically created to match what’s shown on the linked accounts. All the employee would need to do is review it and then submit it to be processed.
- Faster Approvals – Whether your employee is awaiting approval for plane tickets or claims reimbursement, the tool can make sure that it is done with minimal delays. Approvers can have access on different platforms so they can review requests more efficiently. A quicker process ensures your sales workforce will have the support they need to be sales superstars.
Whether you choose free basic software or one with more sophisticated features, an automated system will do wonders for managing your sales expenses. Find out how else you can benefit by reading expense management tool reviews. Hear what other users are saying about these tools to give you an idea of which one would be the perfect fit.
Discover the different providers on the list of expense management software providers on CrowdReviews.com and start making worry free business trips a standard at your company.
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