The pandemic showed new methods of collaboration and sustenance. The number of miles between employees doesn’t define work culture anymore, just their persistence in maintaining it. As an employer, this might get you wondering, is this beneficial for my business? Can working from home save on additional costs? The answer is yes. There are numerous areas businesses can save costs if they just know how and where to look. We’ve crafted this article to help your business do just that. So let’s get started!
What Cost-Saving Benefits Does Remote Work Bring?
- Recruit Anyone from Anywhere: Hire anyone from any remote corner of the world without paying relocation expenses. Your company can now leverage the skills of people who are willing to work but not relocate. Offer a solid business remote work experience and other incentives that enable your employees to stay loyal to the company.
- Reduced Operational Costs: With employees working from home and processes shifting remote, most businesses would not encounter generic business costs like mileage, rent, employee lunches, office supplies, and other such utilities. These can be bypassed with all of the different tools out there, such as webinar platforms for trainings, collaborating, and recruiting.
- Adopting Cloud Technology: Switching to automation-driven technology to balance remote work has helped businesses save costs, enhance accuracy, and improve processes. For example, switching to an expense report software saves companies close to $39,000 annually with expense management automation.
Keep in mind that a business can begin to save or optimize costs only when it is aware of its finances, i.e., it has a well-oiled expense management system in place. Unfortunately, with traditional expense management, the process can be lengthy, tedious, and time-consuming.
Additionally, the damages of conventional methods of management don’t stop here. It also hurts your business with inaccuracy, financial leaks, hidden costs, expense fraud, and more. Thus, companies need to pay heed to their processes before going about optimizing for costs.
How Does Traditional Expense Management Hurt Your Finances?
Traditional expense management leaves multiple avenues open for errors or delays to take place. You might have heard your employees describing it as a tedious or time-consuming process. And, they are right.
List Of Employee-Centric Problems With Traditional Expense Management
- Employees often lose receipts that lead to submissions without proof of spend. While Finance teams can ignore small amounts, more significant spending without receipts can get your business into trouble with the IRS. It also opens your business to fraud as employees would know such deviances are encouraged.
- It takes $58 and 20 minutes to process a single expense report. A typing error here where $23 becomes $32 would take the business an additional $52 and 18 minutes to correct. While this does seem meager, the piling up of such hidden costs can drain your company’s resources.
- Employees cannot be expected to remember all company policies before expense submissions. This may either lead to out-of-policy expense submissions or back and forths with Finance teams for expense reimbursements.
How Low Impact Finance Tasks Impact Your Business Costs
- Finance teams constantly need to check and ensure that every submitted expense has proof of spend as significant gaps in spending can result in troublesome and expensive audits with the IRS.
- Companies process an average of 51,000 expense reports every year. However, tracking and managing all of them through manual methods takes up time and resources.
- On average, 19% of expense reports arrive with errors at the approval stage. This means out of the 50,000 or so expenses, 10,000 of them will have either erroneous values, policy violations, or missing receipts. Rectification in these cases becomes mandatory to prevent severe damage and wasted costs.
- Policy violations are another reason why finance teams send expense reports back for corrections. Every step here is additional time, money, and human effort spent on low-impact tasks.
Why Is Expense Management Automation The First Step To Optimizing Costs?
The simple answer is, small business automation for expense management simplifies expense management for real. It also helps businesses with advanced data analytics and automated policy checks to drive compliance with no human intervention or effort. Finance teams can also push for cost-cutting and cost-saving opportunities via vendor discounts or partnerships with frequent vendors based on expense data analysis.
Additionally, since the pandemic, businesses have noticed a stark 57% increase in fraudulent expenses. Further, Accounting Today states that “Business travel and expense fraud alone cost U.S organizations an estimated 1.8 billion dollars every year.” This is big money that a business can save with expense management automation.
Companies can no longer hope to thrive by relying on traditional manual methods wherein fraudulent expenses that cost them millions of dollars get by. Thus the first logical step for a business is to solidify its expense management processes. An easy and efficient way of doing so is by automating it.
How Does An Expense Management Software Help Businesses Save Costs?
An expense management software addresses your Finance team’s concerns with expense management while also listening to your employee’s grievances. In addition, by combining your expense management with cloud automation, you can review your costs and identify other cost-saving opportunities that you usually wouldn’t have noticed. Here are some additional ways that an expense software can help save costs:
Process Expense Reports Faster
Employees need to do a lot of work, safe-keeping receipts, filling out reports, and ensuring expenses are compliant with set policies. Put together these low-impact tasks end up taking a lot of your employees’ time and effort. So in the larger picture, an expense software doesn’t just bolster productivity but also saves you time and money.
Expense Reports With NO Errors
Most expense softwares come with OCR (Optical Character Recognition) that’s capable of extracting all relevant data from your receipts and auto-populating the fields in an expense report. Automation will significantly increase the accuracy of your expense reports and decrease your operating expenses. In addition, expenses need not be rechecked for accuracy at any stage.
Eliminates Expense Fraud And Out-Of-Policies Employee Expenses
Expense softwares come with robust policy engines which are capable of understanding custom business rules. This means Finance teams can enforce custom policies, per-diem rates, and mileage rates depending on set standards. In addition, since every submitted expense is checked for compliance right at the source of creation, the software helps prevent fraudulent / out-of-policy expenses from being submitted. This keeps expense fraud at bay. This also saves your organization a ton of time and money.
Increased Visibility And Control Over Business Expenses
Gain access to real-time spends across the company to ensure that no costs remain hidden. Even if the budget amount elapses, you would be able to track every single expense down to the penny. Automation also lets you track employee spends wherein you’d be able to identify spending patterns and those who frequently violate policies. This visibility and control help optimize business costs and travel expenses, with Finance teams knowing exactly how to optimize them.
Improved Compliance With No Additional Effort
Automated expense softwares come with robust company policy engines which instantly check submitted reports against company policy. Unlike people, softwares don’t get tired of studying and rechecking. This frees time up for Finance teams to pay heed to other high-impact tasks.
Working from home has become an easy transition to make, thanks to the technology we have today. Having a remote workforce offers businesses multiple benefits to save costs, but some pitfalls need to be explored to reap maximum benefits.
Your situation is unique, so evaluate it correctly before deciding on specific changes you’d make or technologies you’d want to adopt. However, with COVID-19 putting forth remote work as an excellent option, it would be a perfect time to lay the proper groundwork for a sustainable working culture as the year’s pass.