When your employees make a large number of business-related expenses each month, expense reports become an essential means of tracking these expenses. However, dealing with such a large volume of expense reports undoubtedly makes compliance a major concern for you. The more expense reports you need to process, the longer your accounting team needs to spend checking that all documentation has been provided and amounts have been verified. The more time they’re forced to spend on verification, the less likely they’ll be to consistently stick to expense report compliance procedures.
However, by introducing automation into the process, you’ll see that achieving and maintaining expense report compliance becomes much easier.
Challenges of Expense Report Compliance
First, it’s important to understand where compliance challenges exist during expense report processing, so you’ll understand how automation will address them.
Keeping Track of Expense Reports
If your organization lacks a centralized system for storing and tracking expense reports, you’’ll be unable to gather important information regarding the financial health and compliance of your business. Insights that could be especially beneficial for you include:
- Whether all employees are submitting expense reports
- The number of expense reports with errors
- An accurate number of expense reports processed each month
- How many reimbursement payments can be attributed to employee travel versus other expenses
Without the ability to track this data, you’ll never know if there are employees who feel uncomfortable with the expense reporting process (suggesting the process has not been tailored to serve all employees fairly), if certain errors are made more often than others (suggesting a breakdown when communicating reporting procedures), if certain months see more or less employee expenses (which could influence budgeting practices), or if employee travel costs are being managed effectively (which could call for changes in policies and procedures).
The bottom line: without the ability to track expenses, you face major blindspots in your understanding of compliance issues you may or may not be facing.
Reviewing All Reports for Accuracy
Expense reports include several important pieces of information that must be correct in order for them to move forward in the process and reimbursements be issued. This includes making sure the amount, date and expense type matches with the receipts provided. Accounting teams must also ensure all supporting documentation such as receipts and invoices are attached and submitted on time. Even when all information is accurate and accounted for, it can still take a good ten minutes to verify it all.
If someone is responsible for reviewing several hundred expense reports, it may become more advantageous from a time and resources perspective to only review a random sample of reports for mistakes or fraud. You can probably guess why opting to not review all employee expense reports could become a huge compliance issue, though. When you settle for an unthorough review process, you’re accepting that some amount of errors or fraud will exist in your company. The issue is that you won’t know how much.
Reimbursing Employees on Time
When an employee fills out and submits an expense report, it kicks off a process that should ultimately end with them being reimbursed for all verified work-related expenses. However, when you aren’t following effective expense report compliance procedures, the entire process can drag on. Making clarifications and correcting errors will eat up a lot of time, and all of this back-and-forth could make you fall out of compliance with the requirements of an accountable plan with the IRS.
If you need to substantiate an expense within 60 days of it being incurred, but the accounting team has significantly fallen behind in the processing of expenses, there’s a chance an employee will receive a reimbursement payment too late. Then, if they need to return any excess amounts, that needs to occur within 120 days of the expense being incurred, so again, slow processing times could affect your compliance.
Automation Improves the Process
In the fight for expense report compliance, automation is your best and most reliable weapon. With the right technology at your fingertips, several things will happen that will improve compliance.
Reducing Manual Labor
The biggest time-suck of the expense reporting process almost always comes from the amount of time supervisors and accounting teams spend manually reviewing reports. By implementing a system that allows employees to electronically submit expense reports, this time can be significantly cut down. Reports can automatically be carried through the workflow, moving from the employee to their supervisor and then to the accounting team. During review, all the information will be organized and easy to find, and if there is a mistake, it only takes a moment to send it back to the employee. When the entire process is streamlined and no one is being overwhelmed, the likelihood that errors will be caught increases.
Saving Time and Resources
Beyond the number of trees you’ll save by abandoning a paper-based process, automating expense reporting will cut down on the amount of time you’re paying employees to navigate the process, allowing them to do something more productive with their time. Perhaps their time would be better spent performing an internal audit or finally making those updates to your expense management policies.
Flagging Policy Violations
One of the most powerful ways automation aids your expense reporting compliance goals is by flagging activity that you’ve deemed to be out-of-policy. Your system could alert you when duplicate expenses are submitted, when purchases over a certain amount are made, when adequate documentation isn’t provided and more. Once you configure your expense management platform appropriately, you’ll see instances of noncompliance—and the costs associated with them—fall significantly.
Get Expense Report Compliance Under Control With CompanyMileage
One of the biggest barriers to expense report compliance comes in the form of mileage expenses. Employees record odometer readings, and then it’s up to their supervisors or members of the accounting team to verify the mileage is correct for the trips they took. Even the best expense management solutions fail to solve this persistent issue. That’s why we developed our suite of expense reimbursement software: SureMileage, SureMobile and SureExpense. On our platform, not only will you be able to utilize automation to streamline expense report processing, you’ll be able to streamline mileage reimbursement, too.
Rather than verifying the miles driven, our software determines the mileage between the starting and ending points of a trip, eliminating occurrences of mileage inflation, side-trips and inaccurate odometer readings. After expenses have been submitted, CompanyMileage coordinates a straightforward, orderly approval process. Supervisors can review and approve expenses and send them to Accounting for reimbursement all within a single system; once one reviewer has approved, the report is automatically sent to the next person in the sequence. When payment is ready to be issued, it’s a seamless process thanks to our ability to integrate with your payroll software.
Other features that employees will love include integrated Address Books, one-touch check-ins at each service location, automatic flagging of certain behaviors in the system and a user-friendly interface. It only takes employees about two minutes each day to submit expenses, and it saves employers up to 30% on your reimbursement costs. If you’re looking for ways to improve expense report compliance, look no further. Request a demo today to learn more!