The emerging theme in the expense management industry is to truly understand spend. That includes a detailed knowledge of where it goes, what it returns and how to best budget for it. Then, it may surprise you to learn about the wide disparity in the costs attributed to the process of expense reporting.
According to research from The Aberdeen Group, the average cost to process a single expense report is $20.65. But for organizations with visibility, the average cost is $12.51, or 39% lower. For a mid-market organization processing 1,000 expense reports per month, that’s an approximate annual savings of $97,680. With a savings of almost $100K, why won’t you want to look at ways to fully understand your spend?
In order to help you better understand your expense reporting spend, here are three of the most common expense reporting costs and how to fix them:
Expense Reporting Cost #1: Too Much Time Spent Processing
Time is money, and unnecessary manual processing wastes both. Tracking receipts and invoices and then manually entering the data is not only time consuming, it’s also error-prone. Uploading and importing expense reporting data into your back-end system from another location is an additional time-consuming process that can be avoided.
How to Fix It:
An expense management solution will allow you to avoid paper altogether and capture electronic transaction data directly from airlines, hotels and car-rental companies. The line-item details will be automatically uploaded into your expense report.
Other receipts can be captured with a smartphone camera and uploaded in real-time, and credit card charges are automatically routed to the appropriate expense report. Reimbursement can be automated as well. This end-to-end automation saves time and improves accuracy for all users. In fact, according to the Aberdeen Group, you can save 50% of your expense reporting costs by using an automated expense tracking compared to using a manual process.
Expense Reporting Cost #2: Lack of Cost-Cutting Evaluation
Like everyone, you need to cut costs. But you can’t efficiently cut costs if you don’t know where to begin. When you don’t immediately know how your money is spent, where it’s spent and what you get from it, cost-cutting initiatives can be a long, arduous task involving many parties.
How to Fix It:
Expense management solutions can improve your visibility by analyzing corporate card charges, travel itinerary data, supplier contract, invoices and cash expenses to ensure you are getting the most savings. Reporting tools and dashboard metrics can provide you with valuable insight needed to negotiate effectively with suppliers and vendors.
In some cases, customized reports and dashboards can be created to thoroughly analyze spending and identify program improvements.
Expense Reporting Cost #3: Inability to Compare Budget to Actual Spend With Real-Time Insight
According to The Aberdeen Group, organizations with visibility into travel and expenses are 41% more likely to have real-time insight into spend against budget compared to organizations without visibility. Of the organizations with visibility, 52% were more likely to identify savings opportunities and 30% were more likely to be in compliance.
The inability to compare budget with actual spend can cause you to incur avoidable expenses and waste resources when missed forecasts lead to other issues.
How to Fix It:
Automation not only provides real-time visibility into expense reporting, it can also automate compliance and ensure expenses are on schedule with budgeting. Real-time visibility in the form of complete data for analysis and reporting allows you to make the timely decisions that better control costs.
What is your current process for identifying cost-saving opportunities? Can it be improved? Check out our e-book, The “Don’t Wait to Fix It” Guide to learn five easy steps to help improve your expense reporting.