CFOs play a large role in the efficiency of any organization, with crucial obligations of strategic planning, risk assessment, and overall financial management falling within their remit. However, some minor responsibilities can be deceptively demanding too, including the management of employee expenses. This can have a significant impact on the company’s bottom line and must be executed with precision and transparency.
Indeed, having a manual expense process can make the task even more time-consuming. Data entry mistakes and inaccuracies are common and can lead to discrepancies and compliance issues that ultimately hinder the organization’s financial success. They can also open the business to the risk of fraud, as it is easier for dishonest employees to get false expense claims over the line. Rectifying these errors before they get to this stage warrants additional time and effort from the finance team.
If the process on the employee’s side is laborious – involving collecting receipts, scanning them, and painstakingly copying their details into a company system before they get passed through a chain of command for approval – it will lead to other headaches for the finance team. They will be inundated with a higher volume of manual data entry, approval requests, and inquiries, diverting valuable resources away from the more strategic tasks they should be focusing on.
Furthermore, a lack of streamlined expense management can result in the finance department wasting time chasing receipts while employees must pester the chain of command to approve their expenses – a drain on productivity on both sides. The longer the expense process, the higher the risk of delays in reimbursement and general employee dissatisfaction. With a looming recession and inflation levels in Germany still much higher than the EU’s two percent target, many employees are more reliant on fast reimbursement than ever.
Manual expense management can often lead to compliance violations. Ensuring compliance with strict regulations, such as the GoBD, and adhering to the intricate per diem and VAT rates can be particularly challenging without an automated solution. Some expenses an employee incurs during working hours are tax deductible but others aren’t, and expense rates regulated by the Income Tax Act vary depending on the duration of the trip. This can be a source of confusion, and violations not only carry the risk of fines and legal consequences but can also damage the company’s reputation.
But the potential costs of managing a paper-based system go further than non-compliance fines. Administrative costs associated with storing and retrieving paper receipts, data entry, manual validation, and reconciliation can all add up and provide an unnecessary cost sink to the organization. A manual process also leads to a significant loss in financial transparency, which can prevent crucial cost-saving insights. For example, tracking expenses in real time can reveal overspending in office materials or travel costs, which can easily be mitigated through, say, digitization and T&E policies.
Therefore, to address the issues associated with manual expense management, CFOs are increasingly turning to automated solutions. These leverage advanced technology to streamline processes, enhance accuracy, ensure compliance, and improve the overall employee experience.
With the CFO and finance team playing such a crucial role in company efficiency, it is imperative that they have access to a modern tech stack that integrates seamlessly with other existing tools. Automated expense management platforms that connect to the accounting, travel booking, and HR systems significantly reduce the manual input required to process expenses. They bring all types of expenses, including mileage, per diems, and transactions, into one place. Moreover, an automated expense platform ensures compliance with local laws and digital accounting standards, reducing regulatory risks.
Employees can simply upload a photo of their receipt with their phone camera, and the system automatically populates the report, reducing instances of errors and workload for finance teams. Reimbursement is therefore quicker too, boosting employee morale. Automated processes also enable more control over employee expenses, such as travel costs, through budgets and other limits, working to reduce overspending.
A mobile-first user experience provided by an expense management app, combined with push notifications for open tasks, ensures that both employees and managers stay on top of their expense submissions and approval processes. Automating receipt matching, cost center allocation, and other repetitive tasks further frees up employees to focus on more strategic and impactful work, which is essential for businesses during economically challenging times.
Choosing a capable expense management solution means the ability to perform detailed spend analysis, often with the aid of AI. This can provide valuable insights that lead to better cost management and decision-making.
The Circula expense platform reduces the finance department’s workload by up to 80 percent by automatically extracting receipt data and auditing expenses. Immediately after a receipt is scanned, the accounts team can access the data through the system and begin processing the expense.
Futurice, a digital transformation consulting firm, partnered with Circula to enhance its expense reporting and digitalization initiatives. They successfully integrated Circula’s solutions for travel expense reporting, credit card management, and a mobility budget, resulting in significant time savings and improved employee satisfaction. Futurice’s Director of Operations, Christian Ehrling, said: “Der Arbeitsaufwand der Mitarbeitenden für die Abrechnung hat sich signifikant reduziert, von weit über 30 auf jetzt 5 Minuten pro Reise.”
To learn more about how Circula can streamline your company’s expense reporting, schedule a call with one of the expert team today.
