T&E expense consumes a considerable chunk of an organization’s budget. Many companies consider it as the second-most difficult operating cost to control, yet they choose to ignore digitizing of the expense management process. However, managing the company’s T&E expense is the key to getting clear visibility into overall spends, finding out leakages, punishing repeat offenders, constant eye on budget versus utilization and tight control of expense prone departments, mitigating errors, and also ensuring that employees stick to company policy on T&E.
Did you know that expense reimbursement is one of the easiest ways for unscrupulous employees to steal from your organisation? Most likely being in finance you have come across such instances, maybe in the nick of time or more likely too late to take action. You may not be alone in this as T&E frauds are the most often overlooked ones.
These are small frauds that do not make such a significant dent in your overall budget. After all, cancelled flight tickets or pay per use facilities in hotels may not make such a huge difference to a company budget. Right?
Anshul Rai, Co-founder & CEO, Happay says, “Companies are aware that frauds happen but they are usually not aware of the quantum of frauds since they don’t have the necessary data in real-time. Companies who are handling expenses manually (using paper and spreadsheets) are not aware of where and how employees are spending until employees submit expense reports, which is typically towards the end of the month. As expense reports pile up at the manager’s and the finance team’s end, the sheer amount of approvals and paperwork to be done leaves rooms for a lot of errors. Many a time, the approvers might miss or overlook discrepancies and approve expenses anyways. Since policies are on paper and not on the system, each line item in the expense report has to be manually verified with the bills and the eligibility requirements of different employees – this is a very tedious process and again some violations may go unnoticed. During the audit, if the balances don’t match, then tracking and scrutinising the entire paper trail is almost impossible.”
What is the solution?
In one word – Automation
“With Happay, policies of the company are available on the system and the system alerts both employees and approvers in case any expense item violates policy. Companies can easily track the top violators, the spend categories on which violations typically happen and then optimise policies accordingly,” says Rai.
But managing expense electronically is also a simplistic solution that though may provide spend reports and minimize paper trails, costs and time of approval and reimbursement cycle, it may not be smart enough to provide the analytics required to detect fraud. The complexity of frauds calls for advanced analytics platforms bundled with T&E automated platforms. In this age of innovative data analytics and forensic techniques, a T&E platform must provide insight and business intelligence to detect frauds.
Automated T&E systems allow you to enforce your T&E policies automatically. The automated program not only seeks receipts for expenses but can also prompt employees to submit the required reports on time, and comply with expense policies by ensuring that the system accepts only those reports that comply with policy.
Organizations should therefore deploy robust T&E platforms. Automated systems do not stop at simplifying the process of submitting reports and enforcing policy. They make accessing and tracking historical data automatic and generate analytics based insights into expense trends. Notably, tracking historical data was cited as a pain point by 55% of CFOs in the Happay CFO Benchmark Report, as it requires multiple people and a long time to gather data that is urgently required during audits.
As the survey reveals, realizing the importance of regular review of data and expense reports, 90% of the respondents cite detailed spend analysis and actionable insights in real-time as a big priority. CFOs are looking for not just any T&E expense management system but one which has the ability to manage everything related to T&E from one platform. For 90% of the respondents this is a top requirement.
As finance is digitizing and transforming at a rapid pace, CFOs are also looking at flexibility of software to support dynamic changes or growth of the company, which for 91% is a top need.
Companies must pay heed to the T&E expense management system requirements of finance and help them stop the frauds.