Expense Management 101: Your Guide to Expense Reporting

Many ‘traditional’ best practices might not fit companies with remote-first work policies, engage in cutting-edge industries, or have an unorthodox structure. You risk revenue loss and other issues that can quickly destroy a well-thought-out business plan. It’s hard to cut costs and improve efficiency if your financial processes are very time-consuming. Mileage reimbursement expense management definition refers to the practice of reimbursing employees for business-related travel expenses. When a business expense is made, a Whatsapp notification is sent to the employee, prompting them to upload their receipt by snapping a photo; this also simplifies the reconciliation process. When that is done, the admin/manager is notified to accept or reject the expense.

• An expense management software simplifies the process for companies by automating it.
• Include a guide that would state expenses covered by your expense management policy.
• It is so versatile that you can manage or input all the information you want without an internet connection and sync it all to a central database as soon as the connection is established.
• A study by Bayzat has shown that fuel is among the most requested reimbursements category for UAE employees, with an increase of 18% in the average amount per reimbursement since January.
• While some big corporations may reimburse you for commuting to and from work, typically, commuting is not considered a business expense.

Unallowable amounts are amounts that exceed the daily allowance for an expense category. This portion of an expense is allocated to a separate object and subsidiary account that you set up when you map expense accounts to expense categories. The JD Edwards EnterpriseOne Expense Management system (09E) is designed to help companies effectively manage reimbursement requests. The system facilitates entering expense reports and provides immediate error notification if information is missing or inaccurate. It also provides control mechanisms to monitor and audit expense reports, and the flexibility to customize the system for evolving expense and travel policies.

Choosing the Right Tools: Criteria for Selecting Expense Management Tools, like Wafeq

Pluto helps to automatically match spend to budgets in real-time, ensuring accounting and finance teams have accurate updates. Fuel reimbursement, on the other hand, only covers the cost of fuel used for business travel. Employees collect paper receipts and submit them to the accounting department for approval monthly or quarterly. While most costs of doing business can be expensed or written off against business income the year they are incurred, capital expenses must be capitalized or written off slowly over time. Operating expense is deducted from revenue to arrive at operating income; the amount of profit a company earns from its direct business activities.

We’ve partnered with Cashplus to help KashFlow customers manage their expenses using a prepaid card solution. While Keyper was scaling and evolving, there was a pressing need to have a robust system in place that could offer real-time tracking and insights into their financial https://www.bookstime.com/articles/notes-payable operations. In this article, we talk about Keyper’s innovative model & how they leveraged Pluto to get to optimal spend management. You’ll want to move decisively once you’ve identified potential changes to spending habits and department budgeting approaches.

The solution: Pluto’s petty cash digitization

It also refers to the policies and systems that guide any spending and the technology used to process and scrutinize its data. With Pluto’s corporate cards and petty cash management solutions, Keyper has been able to give back their finance team 15+ hours every month. They were able to set specific limits for each subscription, ensuring that costs were managed effectively and  uninformed increases in prices were prevented. This helped Keyper optimize their budget and streamline their expense management process.

• It runs on Autopilot and Pluto prompts us when it needs attention, so we can better focus on our core competency without the extra mental load.
• You should immediately be able to spot expenses that are anomalies or recurring spending that might be able to be cut out from the start.
• They rate software based on different criteria such as ease of use, quality of support, ease of implementation, and more.
• An automated expense management tool can help you save time and resources through real-time expense tracking, customized expense reporting, and automated faster approval processes.
• For example, paying less on advertising reduces costs but also lowers the company’s visibility and ability to reach out to potential customers.

For example, your employee incurred an expense; he just needs to upload the receipt to claim his reimbursements. In this section, let’s uncover how these expense management software can help streamline your business spending. Expense management is the process of verifying, approving, and reimbursing employees’ business expenses. As a result, almost 89% of organizations plan to adopt digital-first business strategies, including automated expense management systems. Include a guide that would state expenses covered by your expense management policy.

Is Salary Considered an Expense?

For example, if goods are sold in January, then both the revenues and cost of goods sold related to the sale transaction should be recorded in January. In the modern business environment, streamlined expense approval workflows are crucial for efficient operations. They help in not only managing but also controlling and validating the expenses within an organization. By implementing well-defined workflows, companies can ensure compliance with internal policies and regulatory requirements, while significantly reducing errors and inconsistencies.

Multiple cards can be issued from one bank account, meaning employees or subcontractors can use a card – reducing the sign-off process and speeding things up. Cashplus cards can also be pre-loaded with an expense budget so that you never overspend. It’s best to create a business culture where, if employees are unsure of whether an expense will reimbursed, they check with you in advance. This can help prevent problems such as you having to pay out for unnecessary expenses, or employees becoming resentful when they have to pay for what they thought was a business expense. Your expense management policy should set out what is and isn’t classed as a work-related expense. You should make sure that your expenses policy is clear and concise; too much small print will lead to confusion.

You must understand your organization’s customer support requirements before you shortlist vendors. If you have frequent traveling employees, you might need a highly rated vendor with quick responses, active live chats, and timely customer support. Formplus is data collection software that facilitates collecting, submitting, tracking, and analyzing information offline and online. It is so versatile that you can manage or input all the information you want without an internet connection and sync it all to a central database as soon as the connection is established. It also helps to manage compliance issues as all the steps are automated, as some prerequisites must be met before navigating to the next stage when using the software.

It looks quite simple, but in reality, there are challenges at each step of the process that pose severe threats to the business’s stability and growth if not done right. Thus, it is essential to understand these challenges to build an efficient expense management system. However, further into the read, you will see how the nitty grits of expense management could make or break businesses of any size if left unattended.

Choosing an Expense Management System

When this is done, it simplifies the whole process, as all documentation is stored in a single database, and everyone has access to it in real-time. Here is a free expense reimbursement template sample, which can also be customized using the form builder option. Pluto’s dashboard can give you a high level but also a detailed view, so you can clearly identify trends and separate expenses. Keep the following steps in mind for the best results regardless of your organization’s industry or size. The mileage reimbursement rate has risen with regular office hours, more in-person meetings, and less remote work.

Let’s look at what expense management means, the various types of expense management, its importance, and its challenges. Data integration refers to the unification of various sources of information into a coherent and accessible structure. This integration allows a more profound understanding of expenses, enabling quick decision-making and strategic planning. Automation, on the other hand, translates these insights into actionable tasks, such as auto-populating fields, scheduling reports, or triggering alerts for irregularities. We’ve also recently introduced a “Quick Add” feature that means you can add out-of-pocket expenses like coffee, food or transport tickets with just one click. Systems like this mean that you’re no longer stacking receipts up until you have a chance to sort through them, you’re simply logging them and paying them as you go!

Explore Wafeq’s comprehensive expense management solutions today to take control of your finances and drive business success. Your expense management policy doesn’t necessarily have to be comprehensive, as it will evolve to suit your employees and business. Employees should be encouraged to clarify whether their expenses are permitted. Many expenses are related to business travel, so make sure your policy includes trains, taxis, petrol (if employees are using their own car) etc. If the travel is international, include sections covering legal document expenses like Visas and any vaccination or medical expenses needed.

• This causes frustration, confusion, and delays in reimbursing employees for the money they spent from their pockets for your business.
• It will also significantly help your board of directors as they’ll have a simplified, streamlined budget to review and discuss at the start of the year.
• Doing so keeps your team on top of where funds are going and can help forecast different spending scenarios and how they might impact your business’s bottom line.
• If the expense is accepted, it is reimbursed to the employee’s bank account in seconds.
• It can be hard to establish an audit trail if expenses aren’t processed immediately, and finding the time to process expenses as they come through can be equally difficult when you’re a small business.