No business minds having to lay out cash for expenses made by employees on travel, entertainment, dining, transportation, and communication. Both business owners and accountants, however, do tend to complain about the hassle involved in keeping track of these expenses. Only 25% of businesses spend $1 million or more each year on small expenses. For the rest, it’s a lot of work that goes into accounting for modest sums of money. Many businesses are beginning to realize that they need to change the way they account for and control their small expenses.
There are clear trends visible in the way these sentiments are shaping business policy this year.
More businesses have written policies, with enforcement
Even a decade ago, small businesses that published, circulated and enforced detailed small expense policies were rare. Unreasonable expense claims were frequent, enforcement was rare and inconsistent, and employee confusion was common.
Today, the trend is turning the other way. While businesses that invest in a thoroughly drafted policy are still in the minority (no more than one in 15), one in three plans to move in this direction. With clearer policy set down, owners who review claimed expenses (one in two) hope to save time.
There is a push to reimburse faster
In the past, when employees spent on travel, food and other expenses out of their own pockets, it took them weeks to come by reimbursement. Today, there is a general sense of impatience with such inefficiency. Employees demand faster reimbursement today, and businesses are beginning to respond to these demands.
Businesses are turning to automation
Manual methods are still the most common way for small businesses to record expenses: pen and paper, spreadsheets, and manual review of each expense. Demand for consistent policy enforcement and faster reimbursement, in addition to the need to save on paperwork, has meant moving towards automation.
More and more, businesses are beginning to realize that it doesn’t make sense to resist automation. Manual expense management costs a great deal, leads to inefficiency and waste — in expense tracking, paper receipt management, and personnel management. One in two businesses have trouble with lost paper receipts, after all, and one in three have trouble even finding a way to have employees submit reports in time.
Migrating small business expense management to the cloud or to onsite software, while it does require an investment, costs little in real terms. Gains made in efficiency mean that these investments are fully recovered in under a year in medium-sized businesses and in two years in small businesses.
Not only do businesses transitioning to computers for expense management approve of the efficiencies gained, they find the improvements to employee morale a worthwhile benefit, as well. With cloud managed expense management, employees are able to gain access to their accounts online or on phone apps.
Improved access to small business finance options is another benefit. With thorough accounting in place for small expenses, applications for business credit cards tend to receive easier approval.
Automation can lead to a sense of control, and improved employee satisfaction.