How is Inefficient Expense Report Processing Hurting Your Business?

Confusing. Time-consuming. Expensive. These are just some words you could use to describe the reimbursement processes in place at most companies. From submitting a stapled collage of receipts and forms to resolving the errors they surely made the first time around, processing expense reports becomes a long and arduous task. The problem only grows in severity when the processes you have in place are disorganized and inefficient. However, if you’ve done expense report processing the same way for years, it can be hard to know if the system you have in place is efficient or not.

Whether it’s anxiety over fraud, mistakes, or even just if your process takes too long, it is easy to be left puzzled when asking yourself if your current way of doing things is the “right way” for your business. Without guidance, this can lead to sweeping your doubts beneath the rug and accepting that processing expense reports has to be slow and expensive. However, ignoring an inefficient process may be hurting you even worse than you may think.

The Hidden Costs of Inefficient Expense Report Processing

Employees who spend their money on business expenses need to be reimbursed. While the price of the expense you’re reimbursing them for should be evident from the forms submitted, the actual cost of the process can be challenging to determine. While the process will always cost money, different factors can play a critical role in how significant an expense it is for your company.

It Is Too Time-Consuming

One of the most considerable hidden costs to think about with your expense report processing is the length of time it takes for a report to travel from submission to payment. As we’ve pointed out previously, processing expenses is a time-consuming project. Even one perfectly filled out expense report takes around twenty minutes on average to process from start to finish. When the expense report isn’t filled out correctly, the time almost doubles, and minutes quickly turn to hours. The result of this is a hit to overall productivity as employees are pulled from more pressing matters and spending more payroll hours per report than necessary. 

Mistakes Happen Often

A report from the Global Business Travel Association showed that reimbursing an employee costs you an average of $58 per expense report if submitted properly. If you only process one a day, this alone adds over $20,000 to the cost of doing business. Unfortunately, not every report will be perfect. The same report also showed that nearly 20% of submitted expense reports had  errors requiring correcting. These mistakes will take an average of eighteen minutes to fix and cost an extra $52 to repair, bringing the total cost of processing a single report to $110. If your business only processes 25 expense reports a week, that’s over $13,000 spent each year fixing mistakes. This doesn’t factor in the wasted time, effort, and added stress experienced by employees.

Fraud is Hard to Detect

The additional costs that expense report processing adds to the overall cost of doing business may be palatable out of necessity; reimbursing employees for fraudulent expenses is not. While we like to think we can trust our employees to be honest when submitting expense reports, a 2020 report by the Association of Certified Fraud Examiners shows that isn’t always the case for expense reports which accounted for up to a fifth of fraud faced by businesses of every size. Expense report fraud costs US businesses $1.9 billion annually and affects organizations big and small. If your reimbursement process is inefficient, it can mask fraud, making it more difficult to find and increasing the time it occurs.  

It Negatively Affects Employee Morale

A recent study showed that employees in the US spent nearly $1.6 billion of their own money on behalf of their employers. The same study showed they did this despite 40% suffering financial hardship due to their employer’s inefficient expense report processing delaying repayment. This statistic doesn’t account for the high percentage of employees who forgo the reimbursement process entirely because of its complex nature. Women are especially impacted by inefficient processes that dissuade employees from using them. Whether because of frugality or because they may feel the reimbursement isn’t justified, a study of UK employees showed that women claimed a fraction of expenses that men claimed. This uneven distribution leads to an unfair financial burden on female employees. 

The financial strain and stress of the initial expense coupled with an inefficient process can make employees feel undervalued and frustrated, causing them to leave for new employment. Once they’ve left, replacing that employee will be expensive. An estimate in Gallup puts the cost to replace a lost employee at around half to two times the employee’s salary. A simple system for expense report processing can help ensure that you repay your employees what you owe them and alleviate employee dissatisfaction. 

Being More Efficient is Better For Everyone

Expense reimbursement represents a high cost for businesses, and having a needlessly complex system only increases that cost. Even an adequate process could benefit from upgraded efficiency. Giving employees a quick and straightforward way to submit and process expense reports helps guarantee that not only will they use it, but the information they provide is accurate. This ensures your employees stay satisfied and your budget remains under control.

Expense reimbursement software such as SureMileage from CompanyMileage will help your company automate and streamline much of the reimbursement process, eliminating its inefficiencies. CompanyMileage helps guarantee your employees receive their reimbursement promptly. Automating the process with CompanyMileage greatly improves the process resulting in significant savings by cutting the time it takes, improving accuracy, and providing visibility throughout. 

Our solution ensures that the process doesn’t stop and moves expense reports through the approval process, saving all involved parties, from the employee to accounts payable, precious time and energy. Providing you with a complete digital record of everybody’s trips, expenses, and payments, CompanyMileage also helps keep your business organized and provides a detailed audit trail. 

Request a demo today and see how automating your expense approval process can save you money.