Automate Your Expense Reports

For most companies, manual processing of expense reports is error-prone, labor intensive and pricey. Worked by hand, the average expense report takes 80 minutes and costs $25 to $75, according to a study by American Express and A.T. Kearney. At some companies, expense processing totals 20 percent of a company’s travel and entertainment (T&E) expenditure--the same slice of the business travel pie as rental cars and meals.

For this reason, firms large and small are migrating to expense management automation ( EMA) systems. By replacing spreadsheet-style work sheets with web-based electronic versions, your company can reduce processing costs by as much as 75 percent, the Amex/Kearney report found. Your travelers will applaud the move, too, since EMA systems are easy to use and often mean quick reimbursement, sometimes in a matter of hours. Reimbursements are made directly into employees’ pre-specified bank accounts or to their credit card accounts rather than in scheduled paychecks or a reimbursement check.

While bells and whistles vary, EMA systems offer the same basic features. T&E-related charges are captured by a corporate card or purchasing card that’s linked to the system, and those charges are immediately migrated to an expense report template. This "pre-population" of the form automatically sorts charges by date, amount and expense category when the traveler signs in. Once out-of-pocket expenses are entered, finishing is a matter of typing in a business purpose and hitting "submit." Because spending rules are loaded into the system, any out-of-policy charges can be flagged for a manager to handle.

Some of the EMA systems created for small businesses use the pay-as-you-go model. ExpenseLink, for example, costs about $10 to file, route, pay and audit an expense report. Three other EMA vendors in this space include Expensable, which is integrated with QuickBooks; ExpenSite; and Expense Reports Pro, which was named one of the top five business applications in PC Magazine’s Shareware of the Year award. It charges $45 for a single-user license, with network and site licenses available as well.

EMA also saves you money through improved back-office efficiency. The market-research firm Aberdeen Group found that companies using EMA systems could reduce headcount in the back office and sharply lower corporate card late fees. Additional savings come from instituting direct deposit of employee reimbursements, which saves the time and expense associated with cutting checks.

The final advantage is transparency. Many companies are aware that unauthorized expenses slip through the non-EMA system, but they can't prove it. EMA systems make it easy to catch fudging, innocent arithmetic errors in the filer’s favor or actual theft. The likelihood of being caught has a deterrent effect, the Aberdeen researchers found. One company it studied saw expense report totals decline 10 percent. In a perfect world, honesty may be the best policy. In the real world, spending policies backed by good software may be the best path to honesty.