Regardless of whether you are managing a small startup or large corporation, every dollar and cent counts. This means that tracking of the company’s expenses is integral in managing the finances and profit efficiently. Inaccuracies in numbers and data can have a significant impact on the company’s finances if not resolved quickly.
Is your organisation is still managing expenses manually with paper receipts and excel spreadsheets? Chances are that these expense records have data entry inaccuracies from time to time. As the company expands, the complexities of expense management are likely to increase in tandem. Even though traditional expenses management and reimbursement may work well for your employees, with continued manual expenses management, this could result in large corporate risks and have a significant impact on the company’s finances.
Here are some of the few challenges associated with manual expenses management and how companies can address them.
Unclear expense policies and processes
Lack of clear expense policies and processes makes it difficult for payroll staff to review and approve expenses claims. Particularly when expenses are handled manually, this means that staff and reviewers have to manually check each expense item to ensure compliance. This means reviewing expense categorisation, amount claimed and whether it is compliant with the organisation’s internal policies. Inaccurate expense classifications and wrong figures can result in expense non-compliance, resulting in loss of time and monies for the organisation. Furthermore, manual expense management makes it difficult for organisations to track every employee’s expense against the organisation’s policies, which increases the likelihood of fraudulent claims. All these eventually add up to additional costs for the organisation.
Delayed employee reimbursement
Most organisations will agree that wasted time translates to money lost. This is certainly true when it comes to the traditional paper-based expense management. Manual paper-based expense tracking and reimbursement is time-consuming and risks high data entry inaccuracies. This could be attributed to the time for employees to consolidate their receipts before submission to HR, followed by manual review and approval before entering into the payroll system for reimbursement. This entire lengthy process eventually delays the entire expense reimbursement process.
Lack of expense visibility as business expands
Manual expense management provides poor visibility on the entire expense process. The complexities in managing and reviewing expenses are further exacerbated as the business expands. It becomes extremely difficult for reviewers to keep track of employees’ expense claims. Whether it is compliant with internal financial and HR controls, duplicated submissions, or false expense claims. With paper-based expenses management and excel spreadsheet checking, there is a high possibility that inaccurate expense entries will go unchecked and unapproved. Likewise, this eventually imposes additional costs to the organisation.
The solution lies in automation
With all these challenges associated with the manual expense management, the bottom line is to automate this administrative and time-consuming process. Advancements in technology today have made it extremely easy to monitor, track and review employees’ expenses by using a comprehensive expense management software.
Many businesses today adopt cloud-based software to automate their expense management system. Expense management policies and procedures can be easily set up within the expense software. It facilitates the submission, approval and reimbursement process. Concurrently, it enforces compliance with internal controls and regulatory requirements.
What makes a good expense management system?
A good expense management software should be able to integrate seamlessly into the organisation’s existing payroll software. This eliminates the need of manually transferring approved expenses data into the payroll system for processing. Approved expenses will automatically be synchronised into the particular payroll period for the month. This reduce the chances of human error as opposed to manual expense transfers. This ensures that payments and reimbursements are timely and accurate.
For business with an existing expense management software, it is crucial to review internal procedures and policies from time to time to ensure relevance. Some key questions to ask could include: is the approval and reimbursement process simple for payroll staff? Are the existing policies compliant with the latest labour laws and legislations? Periodic reviews of the expense management process will help to maintain compliance while driving process efficiencies.
Thanks to the rapid advancements in technology, HR functions can be centralised on a single platform for easy access. There are times whereby HR software and payroll are located on separate platforms. With some even arguing that the latter should be parked under Finance.
What happens when HR and payroll are on two separate software?
A HR and payroll system that is not integrated on the same platform can result in data entry errors and inaccuracies. As data needs to be transferred from one platform to another. This may result in duplicate entries and miscalculations. This in turn affects payroll and may ultimately disrupt daily payroll processes and HR functions. Late salary disbursements can also result in unhappy employees.
There are plenty of benefits associated with integrating your HR software and payroll.
Accurate payroll reporting
With your HR software and payroll integrated on a single platform, customizing and generating payroll reports can easily be done with a few clicks. For instance, there may be times whereby you need to track expenses payments made to employees as part of internal auditing. Suppose your expenses tracking were made on your payroll software and you need to update these records manually on your payroll software. This may result in inaccurate data entries and risk incorrect calculations during salary calculations or tax filing.
By integrating key HR functions such as expense management and claims submission with your payroll software, it ensures real-time update of your payroll records. Concurrently, this data will be synchronized with your employees records. This eliminates the risk of inaccurate payroll records.
Ensures payroll compliance
Ensuring payroll compliance with the multiple labour laws can be stressful particularly when you are processing payroll for several countries. An integrated HR and payroll platform can help to take away that stress by ensuring accurate salary calculations and tax deductions based on each country’s labour laws. This can be done by configuring your payroll software to calculate salaries and tax deductions based on the individual employee’s profile that is extracted from your HR software. This ensure that your payroll is compliant with the respective country’s labour laws. It helps you to easily generate historical payroll data during internal or external audits.
Improves communication and drives transparency
A unified HR and payroll software can empower your workforce, improve internal communications and drive transparency. Timely and accurate salary disbursements plays an important role in employee engagement. Concurrently, implementing an integrated HR platform that is equipped with self-service tools for employees further enhances the employee experience.
Tools such as e-payslips, online leave balance and applications, e-claims submission and reimbursements allow for seamless access to payroll. Employee’s personal details do not need to constantly go through the HR department. It also provides employees with a sense of ownership as they are able to take charge of their own HR needs.
An integrated payroll and HR software allows both HR and payroll teams to access the same information, sensitive payroll data and employee records, on a single platform. Not only does it help to drive internal efficiency and data accuracy, it helps with payroll compliance as well.
As HR and payroll gradually intertwine to play a more strategic role within the organisation. It would make more sense to pool together the department’s resources and seek as much integration between HR and payroll where possible.
