Reimbursements take forever
The average business takes nine days to process employee expense claims
. That means employees often have to wait weeks to get reimbursed. For large expenses, this can even cause financial problems for employees. For example, consider an employee who frequently makes business trips. Hotel and airline expenses add up quickly, meaning that the employee could end up thousands of dollars out of pocket. Waiting weeks for reimbursement in this situation is understandably frustrating.
Simplifying expense forms can help to speed up reimbursements since both the employee filling out the form and the person approving the expense can get through it more quickly. It’s also a good idea to review your entire expense process and see if there are any steps you can streamline or eliminate altogether.
You can get rid of reimbursements altogether by switching to a virtual credit card expense system. With this process, employees submit expense requests and are assigned a virtual card number to use for the expense. Since the business is paying for the expense rather than the employee, there’s no longer any need for reimbursements.
Losing a receipt means no reimbursement
Most expense reporting processes require a receipt from the employee. This is a reasonable precaution since it’s the only way to verify the nature of the expense, the date, and the amount. But if an employee loses one of those receipts, he can’t claim a reimbursement for the expense.
You can greatly cut down on lost receipts by encouraging employees to snap a photo of each receipt as soon as they get it using their phones. This is a wise precaution in any event because the ink on register receipts often fades out over a few days or weeks, making it potentially unreadable by the time the employee files for reimbursement.
Better yet, have employees upload their receipt photos to a central expense system. That allows you to keep receipts in secure storage for as long as your expense policy requires, even if an employee loses his phone or accidentally deletes the image.
Expense policies are unclear
Some employee expense policies are so vague that employees may not understand every detail — resulting in non-reimbursable expenses and unhappy employees. Worse, employees may not be notified promptly of changes to existing expense policies, which means the finance team must either refuse reimbursement on an expense that was formerly acceptable or “grandfather in” an expense that really shouldn’t be reimbursed.
If your expense policies are so complicated that employees are having a hard time understanding them, it’s a blatant sign that you’re overdue for some policy revisions. Like expense forms, expense policies tend to become more and more complex over time as new policies are added and old policies stay long after they’re no longer applicable. Spending a few hours cleaning up your expense policies — and then clearly documenting the results — can make a huge difference for your employees.
Web-based expense systems generally require you to input your expense policies, as the software uses these policies to figure out which expenses it should accept or decline and what information it must collect from employees. That pretty much forces you to clarify your policies well enough for the system’s AI to understand them, which should make them much clearer for employees as well.
Expense policies are overly restrictive
Expense fraud costs companies around $2.8 billion per year according to one 2016 study
. Employers are understandably concerned about fraud and use restrictive policies to minimize it, but that can make it difficult for employees to make legitimate job-related purchases. If an employee needs to get three different signed expense approvals from managers whose calendars are constantly full, an important purchase may be delayed to the point where it becomes difficult for the employee to do his job.
Consider ways to cut back on the approval requirements without exposing your company to undue risk. For example, if you split your expense forms into one for small/simple purchases and one for large/complex purchases, you could have much lighter approval requirements on the simple form. It’s also wise to review your expense restrictions on a regular basis — particularly if you set dollar limits on certain purchases. As prices rise over time, those limits can quickly become outdated.
Good reporting and expense tracking are the best ways to protect your company from expense fraud without strangling your employees with restrictive policies. Such tracking is nearly impossible to implement with a paper expense system but is included by default with any good web-based expense system. In the case of Teampay, the bot will automatically watch for expense variances and other red flags and will notify you immediately if it detects anything suspicious.
Needing to use personal credit cards
Employees often put expenses on their own credit cards and then pay off the charges with the subsequent reimbursement, but if the reimbursements are slow to come, then the employee may be stuck with interest charges on the card. Large expenses may also max out an employee’s personal card, forcing him to find another way to pay for his own purchases.
Consider giving company purchasing cards to employees with large expenses. You’ll need to set up a process for reviewing card charges to make sure employees are using those cards only for approved purchases, but then you’d be doing something similar for reimbursement requests anyway.
Here’s another example of how virtual credit cards can greatly improve an employee’s comfort with regards to business expenses. Providing your employees with such a resource means they’ll never have to use their own credit cards for business purposes and can avoid all the resulting hassles.
Automation is the ultimate cure
A good automated expense process paired with virtual credit cards will solve each and every one of these issues. Using virtual cards eliminates the need for reimbursements altogether. The controls such systems offer mean a lower risk of fraud, so you can loosen up your expense policies a little. Employees can snap a photo of each receipt for upload and never fear losing them. Finally, automated expense processes are far quicker and less tedious than any manual process.
No wonder 60% of companies switching to web-based expense systems
achieved ROI within a year. Make the switch to automation, and your employees will thank you.