Is your business future-proofed? Technology was already changing the fundamental processes in the business environment before the pandemic. However, in a post-pandemic world, accepting and adapting to new ways of doing business is no longer an option; it’s a requirement to stay flexible, competitive, and profitable.
As you take a deep dive into your organisation, you might be looking for ways to future-proof. One way you can bring your business to today’s times is to digitise your expense reports. In this article, we’ll cover the pros and cons of digitising your expense reports, helping you decide if this move is right for your organisation.
What is Digitising Expense Reports?
Digitisation is the conversion of a manual process to one that can be completed electronically. For example, instead of manually reconciling your bank account, most companies receive electronic bank statements. Digitisation of expense reports follows the same principles. Instead of manually completing reimbursements and keeping track of dozens of paper receipts, expense management software handles these processes for you.
Take N2F’s expense management software, for example. This program gives employees the ability to upload receipts, which then go through an AI-powered error detection process, route to the necessary parties for approval, and seamlessly integrate into your accounting system. Instead of passing a physical receipt around the office, the process is digitised, resulting in greater efficiency gains and smoother workflows.
The Pros of Digitising Expense Reports
#1 – Reduced Admin Time
Removing the burden of collecting and processing manual expense claims is one of the top advantages of digitising expense reports. Admin automation is important to direct your team’s efforts to other value-added tasks, such as invoicing customers timely or answering customer inquiries. Reduced admin time is also a crucial component of issuing faster reimbursements. When the expense claim can seamlessly move through the chain of command, employees will see their reimbursements quicker, leading to higher satisfaction rates.
Digitising your expense reports can save your admin nearly 75% of the time it takes to process expense claims. Let’s say that your team spends 10 hours each week going through receipts and getting reimbursements approved. What could your team do with an additional 7.5 hours back in their week?
#2 – Lower Mistakes and Errors
One of the main disadvantages of manual expense claim processing is mistakes. It’s easy to transpose numbers or miss an amount when you are sorting through dozens of receipts. This isn’t the case when digitising expense reports.
Employees are in charge of submitting receipts and claims, which then go through a robust process to check for accuracy and completeness. For example, maybe an employee forgot to attach a supporting document. The employee would be required to add the attachment before it moves to review by a manager.
#3 – Stronger Fraud Prevention
Another pro of digitising expense reports is fraud prevention. Expense management software with built-in fraud controls identifies any unusual claims, flagging them for review. For example, maybe an employee accidentally added an extra zero. Expense management software quickly identifies these discrepancies to prevent the amount from being paid out.
In fact, it’s estimated that expense claim fraud averages €747 per employee per year. If your business is growing, these costs can add up and impact your profitability and financial stability.
Fraud prevention controls are also crucial to ensure that expense claims follow company policies. For example, you might decide to set an expense reimbursement limit each month. If an employee tries to go over this amount, your team will be notified. Remote Access
Most growing organisations need flexibility in their expense reports. For example, let’s say that your business is in the construction industry. While your admin team might be in the office, your direct labor may rarely visit the office. This can lead to a pileup of expense claims at the end of the reporting period.
By providing every member of your team with remote access, such as through an app, you can streamline your expense management function. Your staff can submit an expense claim regardless of where they are located, making the entire process more accessible.
The Cons of Digitising Expense Reports
Despite the mounting list of pros, there are some cons of digitising your expense reports. Let’s explore these items in more detail.
#1 – Upfront Cost
In general, the primary barrier for companies considering the adoption of an expense management solution is the perceived cost. The time and resources required to research and evualuate different expense management software providers to find the right fit can also be seen as additional costs.
However:
- Processing a single expense report costs around €50.
- One in five expense reports contains an error.
- Correcting an error increases processing costs by approximately €48.
- Handling an expense report takes an average of 20 minutes.
When you factor in the salaries of the employees managing these tasks, it becomes clear that expense reports represent a significant cost center.
Therefore, while an expense management solution may seem costly at first glance, the return on investment is extremely rapid. On top of that, it frees up valuable time for your employees, allowing them to focus on higher-value tasks.
#2 – Security Risks
Many companies fear that digitalization could open the door to cyberattacks.
However, manual processes do not necessarily mean security. Expense management software places the protection of sensitive client data at the core of its priorities. For example, a solution like N2F ensures reliability, security, and compliance by relying on recognized certifications and standards that meet the requirements of finance departments and regulatory bodies.
When selecting your expense management solution, you may want to check:
- Where the data is hosted (within or outside the EU)
- Whether the solution complies with BSI standards
- Whether it is GDPR-compliant, guaranteeing confidentiality, traceability, and the security of personal data
# 3 – Employee Training
Like any new process, you will need to take the time to train your team about the digitisation process. This might include your expectations for using expense management software and overcoming any resistance. Employees need to understand the benefits of digitisation to fully accept the process, which can take multiple training sessions.
Here are our recommendations to ensure smooth user adoption of the solution:
- Communicate early: explain that you are looking for an expense management solution and how it will make expense reporting easier for employees.
- Set up a working group: bring together a small group of employees from different departments to share their needs and test potential solutions.
- Train your teams: once the solution is implemented, provide training sessions for all users.
- Train new hires: as part of the onboarding process, introduce new employees to the solution and explain how it works.
The Bottom Line: Is it Time to Digitise Your Expense Reports?
While choosing to digitalize your accounting functions brings numerous benefits, it is natural to have concerns and doubts when selecting an expense management solution.
Yet, the digitalization of your accounting processes—and more broadly, your entire organization—is a powerful tool to streamline expense management, gain greater visibility over financial flows, empower your employees, and accelerate reimbursements.
When moving toward a digital solution, it’s essential that you adopt solutions that fit your business needs. Start a free trial with N2F today and save valuable time for your business!
