As a company, if you’re not worried about expense fraud–then you should be. In fact, according to a study conducted by the Association of Certified Fraud Examiners, expense reimbursement fraud makes up 15 percent of business fraud. Because of this, businesses suffer an average loss of $26,000 every year. Read more
Expense management systems are in place for two primary things: to track and manage how a business spends its money. However, if you have an inefficient system, this can also spell financial loss for the company. Read more
It’s a fact–every business or organization will have to deal with expenses. And these expenses have to be recorded, reported, and processed. These have to be verified as well.
However, despite the times and technologies we have today, there are companies that still rely heavily on paper-based and manual expense reporting. Many employees may not complain as they are used to the way they have always done things. However, what they don’t know is that they may be missing out on so many things. Read more
Today’s dynamic corporate environment is becoming more and more global. Organizations all over the world must keep up with the latest technologies and the demands that go with these. Business performance and productivity goes hand in hand with insights and initiatives that help move the business closer to its goals.
And all these become better when they happen in real time.
And this is where Gorilla Expense comes in. Read more
A mid-sized organization has its share of challenges especially in this era of technology and globalization. Particularly in business travel and expense management, finance managers in these organizations can find several pain points that eventually trickle its way to company operations, and finally the bottom line. Therefore, it goes without saying that an effective expense management tool is necessary for any organization if they want to succeed in what they do and find this success reflected in their financials.
Enter Gorilla Expense. Read more
How much is it to travel from your main headquarters to your satellite office in another state? When you go around and ask your colleagues, odds are, they would have different answers.
This simple experiment shows just how easy and common it is for employees to make honest mistakes on their expense reports. The question is, however, are these really mistakes or deliberate misrepresentations? Read more
The recent economic downturn, difficult credit situation, and increasing costs have all arrived together. For many companies, this has forced them to take a closer look at their internal processes as they seek ways to cut costs, improve efficiencies and increase bottom lines.
One area we are seeing a lot of interest in is Accounts Payable (AP) automation, with many companies striving to make it 100% automation.
For these companies, cutting costs associated with the AP process, automating it, making it less time consuming and providing panoramic visibility to decision makers in Finance is a no-brainer. Take the example of Zappos – restructuring their financial processes reduced their month-end closing process by 10 days. For a $1Billion company, that is huge!
So what are some of the key areas that CFOs, Controllers, AP Managers, Purchasing Managers are looking to improve their internal processes with relative ease while contributing to the organization’s overall mission to streamline costs?
Automation is the key to efficiency (and success)
Consider the inefficiencies in a non-automated, manual, paper-based process:
- An Aberdeen Group study found that it can take anywhere from 3.5 to 15 days to process a single invoice. (The industry average for 50% of companies is 11 days to process a single invoice. Yikes!). The cost of processing can range from $5 to $25 for a single invoice
- On the T&E expense report side of things, another Aberdeen report found that it can take anywhere from 3 to 22 days to reconcile and reimburse a expense report. The cost of processing an expense report manually is $35.28 versus $10.75 for companies that have an automated process
- This includes the costs associated with manual processing, shuffling paper between individuals and departments, exceptions processing, missing data/receipts, accrual delays, failed audits, duplicates, and late payment fees
On the other hand, the efficiencies gained by automating these AP processes produce results that are definitely dramatic. These include a:
- 92-96% reduction in paperwork
- Greater than 29% improvement in labor productivity
Another way to look at this comparison is even if you have dedicated data entry staff and devices to help with managing the manual process, you can typically process 1,000 documents (invoices & expense reports) a month per full-time employee (FTE). By contrast, automated and rules-based matching increases that number to 6,500-9,000 documents a month per FTE.
Conclusion: Automation not only brings significant efficiencies to the AP process, but also helps grow the business with existing staff. Basically, you can do more with less.
Control – at your fingertips
By automating as much of the AP process as possible, you get greater control and better visibility into spend. And this applies to invoices and expenses. While rules, routing, policies can be configured to unique company configurations, the biggest advantage is being able to review spend on an expense report or invoice in a timely manner. Not having to review every single transaction means there is more time to focus on important violations that require attention.
Automating the process also captures the document and additional data so that AP Managers have full visibility into the process. No more expense receipts or invoices hiding on individual desks. AP and Finance can now maintain a more real-time view of their corporate spend at any point in time, thereby providing more control.
Conclusion: Automation results in greater, not less, control over your internal Accounts Payable process.
But what if this is too expensive
There are many solutions that offer end-to-end AP automation using the Software-as-a-Service (SaaS) model that require no upfront purchases. Choosing an AP solution that is offered as a service allows the company to truly pay-as-they-go! And with a typical SaaS model, the company can expect periodic upgrades and new features that add more value. This means companies can now reach their ROI much faster than before.
Conclusion: Automating the Accounts Payable process is more than ever available to a wider range of budgets.
Does company size matter?
Cloud-based solutions coupled with a SaaS business model offer a very low marginal cost to get started. With economies of scale and best practices, everyone benefits from automation. And, as discussed earlier, automation enables AP to focus on more strategic activities, such as, sourcing, reporting, spend analytics and vendor management.
Conclusion: Even small companies can save significant $$. Some research reports suggest annual savings can range from 4 to 17% of annual spend. Even for a small company, that can be big bucks!
How can analytics help?
Imagine now, you have all of this automation and data at your fingertips. How about a quick report on outstanding invoices for vendor ABC, LLC? How about a ‘spend to-date’ report on the AMEX corp. card for T&E expenses? Being able to massage the data and use it to arrive at meaningful conclusions is the key aspect of Analytics and Reporting modules. Providing such data to decision makers like AP Managers or CFOs provides tremendous value for the company to plan better, conserve money and be very strategic about growth. Several cloud-based solutions for Invoices & Expenses provide out of the box reporting and analytics that companies should definitely consider and incorporate.
Conclusion: With the amount of data churned out today, intelligent analytics is really a no-brainer. Smart companies utilize this data, make sense out of it and provide it to decision makers to really boost growth or drastically cut costs for companies. By paying attention to this, companies can put money back in their pockets.
It is very obvious to see that the benefits of AP automation are huge and cannot be ignored for the typical 21st century company. Let’s take a quick look at them again:
- Huge labor savings across the company
- Efficiency boost while processing Invoices & Expenses
- Reduced delays
- Improved transparency
- Panoramic visibility for decision makers
Whether the architecture is cloud-based and delivered as SaaS or an On-Premise Hosted solution, the move will get a company closer to becoming paperless. Automating and streamlining Invoices & Expenses will also provide a secure and serviceable archive for data.
Finally, process improvements can be realized in days, rather than months, resulting in a rapid ROI. This will leave the company with an end-to-end 100% automated AP solution that increases compliance, cuts costs, and reduces cycle times.
Now that’s a grand vision. But very much achievable!
As part of a recent research, most managers and travel budget owners for small and medium businesses cited managing costs as the primary goal for 2014. The methods companies use to achieve this goal, vary widely within the SMB segment. The travel spend for companies in this group range from less than $2MM in annual US booked travel to $12MM on the high end.
Most SMBs struggle with the same challenges – lack of internal resources to manage T&E, no dedicated travel manager, missed supplier relationships and a general cookie-cutter travel management program setup by the travel agency, if one exists at all. The best of breed companies may have better control on travel spend with elaborate procurement strategies and internal resources that manage the company’s travel program and spend carefully. These resources typically report to the CFO, thus offering the finance office full visibility into spend.
The reason that travel management as a concept is a challenge for SMBs is because there are many factors that drive a company’s travel strategy: travel patterns, international vs domestic, company culture, senior management’s support, business focus and others. Regardless of the status quo, it is never too late for a company to manage its travel and T&E processes more efficiently.
“I don’t believe there’s a company out there that can’t benefit from some level of a managed program,” said Directravel president Sam DeFranco. “When a company feels like there’s a lack of control of their spending and they only have basic expense processes in place, their antenna should be up.”
Several SMBs were focused on getting the right tools and processes in place in 2014. One was in the midst of “designing and implementing a full-scale travel management program,” while others were planning to implement a robust automated expense-reporting system as soon as possible in 2014.
In the various SMBs, even with senior management support, a planned travel policy, TMC relationship and T&E expense reporting solutions in place, companies reported ongoing challenges with compliance. Several of the companies reported their greatest travel management challenge today was to get travelers to comply.
“At larger companies, you’re dealing with a multitude of people that touch T&E,” said DeFranco. “At one company alone, you could have a travel manager, a director of procurement, a director of purchasing, expense management, HR and a risk manager. Inherently, the SMBs simply do not have the same infrastructure, so to compensate for that, the travel management company account manager essentially becomes an extension of the customer.” One company highlighted the biggest travel management challenge as “achieving objectives with limited resources.” It’s a position in which many managers in the small and midsize segments find themselves.
What are your challenges when it comes to managing travel and travel related expenses? What are your goals for 2014? Let us know in the comments below.
Reference: BTN, "BTN's 2014 Small & Medium Enterprise Report, Apr 15, 2014"
Our customers frequently ask us questions on this topic. Mainly – What is the IRS policy for a receipt? And is it only needed for expenses greater than $50? There seems to be a lot of confusion and misinformation on this topic. So, to clarify doubts, here is the scoop –
1) The IRS accepts electronic receipts, but there are a few caveats (read more on this from a previous blog article we wrote. Click here)
2) Actually, the IRS does not need a receipt for expenses less than $75 (believe it or not!). Here is the text from the IRS publication 463 that validates it –
What Are Adequate Records?
You should keep the proof you need in an account book, diary, log, statement of expense, trip sheets, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.
Documentary evidence. You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses.
Exception. Documentary evidence is not needed if any of the following conditions apply.
- You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. ( Accountable plans and per diem allowances are discussed in chapter 6.)
- Your expense, other than lodging, is less than $75. <——
- You have a transportation expense for which a receipt is not readily available.
If you want to read the entire publication, it is available here. Hope you found this article to be useful! Now you can light a mini-bonfire and burn those <$75 receipts.
Please note that this is NOT legal or tax advice. Please contact your attorney or accountant for more information.
If you think you have strange expense reports, you must see this! Robert Half Management Resources survey interviewed several CFOs and asked them to name the most unusual things they have seen employees include in expense reports. The results – bound to raise both eyebrows! Here are a few of the most questionable items:
– Cosmetic surgery
– Lottery tickets
– Pet food
– A trailer rental for a family reunion
– $12,000 for a family trip-+
– A teepee
– A fine for crashing into a toll booth
The survey was developed by Robert Half Management Resources, and it was conducted by an independent research firm. The survey included responses from 1,600 U.S. and Canadian CFOs from a random sample of companies with 20 or more employees.
The list also included gadget, leisure and hobby expenses:
– A person lost his personal cell phone somewhere in the office, so he submitted the cost of a new one
– Movie tickets
– Hotel charge for viewing adult movies (Yikes!)
– Day at the spa
– A golf trip for the employee and his three friends
– Video game console (PS4 maybe?)
Personal expenditures were frequently cited by executives as questionable. Here are some examples:
– Grocery receipts
– Pair of socks
– Toilet paper
– Hot tub supplies
– Golf clubs
– Expensive lunch for the employee, without clients
Expenses covering the cost of personal celebrations and not related to the office was equally if not more surprising:
– Flowers the employee bought for his wife
– Expenses for his son’s birthday party
– Wedding anniversary dinner
Anyone submitting an expense report should double and triple check their expenses to avoid this situation, which could definitely land the employee in hot water. One respondent said “The most unusual thing I saw was a submission for something that had already been expensed and reimbursed”
(Sourced from Robert Half Management Resources)
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