Team Happay
By: Team Happay
Published on: March 24, 2017

Employee Reimbursement - Major Pain Points

The cost of a business can be split into fixed costs and ad-hoc expenses or operation costs. These operational costs could be anything from administrative expenses to travel and entertainment expenses which are usually incurred by the various employees in the organisation. Some companies may provide funds in advance for business spends whereas in other cases these expenses are borne by the employee and later reimbursed by the organisation. But the manual reimbursement process can be inefficient and cumbersome for both the employees and the business.

WHY IS REIMBURSEMENT A PAIN FOR BUSINESSES?

Lack of prior visibility
With only manual processes in place, businesses often struggle to find the true cost of operational expense in time. Since these expense amounts may vary due to certain factors, businesses aren’t able to forecast, track or control such operational expenses until they’ve been made on behalf of the company.

Policy violations
Though most businesses have an extensive expense policy in place, tracking policy violations can be a mammoth task in a large organisation which follows a paper or spreadsheet based expense management process. Finance teams have to deal with multiple expense reports from employees who fall into different hierarchies where different expense policies may be applicable. Policy violations often slip through the cracks in these cases

Processing costs
The processing cost of a reimbursement isn’t just the cost of paper the report is filed on. The time spent by the finance team to verify and reconcile the expense is also a cost borne by the company giving out reimbursements. A 2016 PayStream Advisors study pegs the average cost of a manual reimbursement at $26.63 per report.

WHY IS REIMBURSEMENT A PAIN FOR EMPLOYEES?

Reporting hassles
The process of reporting business expenses can be cumbersome for most employees as they have to take significant time of their work in order to file expense reports. They must collect expense receipts, file expense details into paper vouchers or excel sheets and submit these reports physically or through email.

Lack of transparency
Employees also struggle with a lack of transparency with respect to their expenses and reimbursements. They may not know if they could make a particular expense on behalf of the organisation. With this, there is also a lack of transparency on when they would receive their reimbursement. After getting the reimbursement, employees may not know why a particular expense was declined, forcing them to follow up with the finance team multiple times.

Time taken for reimbursement
For an average traveling salesperson, around 10-15% of their monthly salary is stuck in the travel expense and reimbursement cycle. Delays in reimbursement or uncertainty surrounding it can be very stressful for such employees.

IS AUTOMATION THE ANSWER?
Through automated expense reporting and reimbursement, business could bring in much needed efficiency into the reporting process. Cloud telephony provider Knowlarity managed to reduce time taken to process reimbursements by 87% through Happay employee expense management solution. Automation also provides increased visibility into ad-hoc expenses. HVL Pest Services was able to track and control their operational expenses through Happay and gained from more accurate and timely Profit & Loss statements.

Businesses using automated expense management were also able minimise policy violations and cash leakage. Employees would experience ease and flexibility with paperless expense reporting. They were receiving reimbursements 7X faster compared to manual processes with a greater level of transparency into expense policies and expense approval.

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Team Happay
The editorial team at Happay puts together curated content that helps Indian SMEs and Enterprises take control of business payments. We create content on a wide array of topics from B2B payment trends and spend management best- practices to real-life case studies of how CXOs of different organizations use automation and mobility to manage business spends more effectively.

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