ROI on Expense Management Software and Why You Should Consider One
Processing expense reports can be notoriously tedious not only for employees who are needed to account for funds but also for the finance department who don’t enjoy the labor-intensive workflow of recording, submitting, reviewing, and reimbursing expenses.
Processing expense reports can be notoriously tedious not only for employees who are needed to account for funds but also for the finance department who don’t enjoy the labor-intensive workflow of recording, submitting, reviewing, and reimbursing expenses.
Luckily with the advancement in technology expense management software can help automate the entire process, saving companies valuable time and energy.
The idea of switching to a better solution is appealing, but what about the cost? Going through a return on investment analysis is a good way to check the numbers and see whether expense management software makes sense for your company.
What’s the ROI on Expense Management Software
On many occasions, the criteria for the Return On Investment of Expense Management Software is based on a number of things.
Most costs related to the business expense management process can be easily detected and quantified. How do you ask?
First, there are all the people in the company who generate and report expenses. Depending on the system established in the company, the periodicity of the process varies.
Expenses are normally reported on a monthly basis. For each expense reporter, it is then necessary to ascertain the average time taken to generate the expense report.
A standard figure to use as a reference would be around half an hour. We also need to take into account the cost per hour to the organization of this employee.
By multiplying these three numbers together, we obtain the cost incurred by the company for the expense report.
The second phase known as reviewing is equally a crucial phase of the process. There tend to be fewer people involved in this stage but, as they are often senior figures in charge of a department, team, or similar, the cost per hour is usually greater.
This is also simply a case of multiplying the number of expense reports per month by the average spent on a report and the cost per hour.
From this point onwards, the additional factors to be considered in the calculation of the ROI vary significantly depending on the organization.
One such variable factor, for instance, is the occurrence of business expense fraud. There are also cases that involve duplicated layers of verification and approval, with the related increase in costs.
In a more practical way, we can base this on research from the Global Business Travel Association, calculated in GBP, to give us a more generalized overview of the ROI of the expense management software industry.
According to the research:
- 20 minutes is the average time taken to complete an expense report
- £37.96 (KES 4766.06) is the average cost of processing an expense report
- Up to 20% of expense reports contain errors
- 18 minutes is the average time taken to correct an expense report
- £34.03 (KES 4272.63) is the average cost to correct an expense report
These hidden costs can put a drain on company resources. The report further shows that companies process an average of 51,000 expense reports each year meaning companies around the globe spend, on average, approximately half a million dollars and nearly 3,000 hours correcting errors in expense reports annually.
Of course, we can’t rule out the fact that these numbers do vary by company size and spending but still, these are quite big figures that can actually be saved.
Companies that have large annual spending or more employees actually spend less time processing a single expense report compared to smaller companies with lower annual spending.
Luckily, using the right expense management software tool, you can automate the entire expense management process, which in turn will alleviate the pain points around business expenses.
Also Read: Virtual Cards // 7 Great Real-time Benefits to Organisations
Automated top expense management software, like Boya, offers free virtual cards to help create an online transaction card per active user and no monthly charges for the cards
With features such as receipt scanning, automated advanced approvals, real-time reporting, and card statements, the Boya Platform as an expense management software helps you to significantly reduce not only the time spent submitting and approving expense reports but also the number of errors contained within them.
While the above shows the quantifiable ROI of Expense Management software there are also a number of non-quantifiable benefits of the platform.
Boya for example helps you close your accounting books 5X faster, employees will spend zero hours doing expense reports since reports are automated, and there is a 100% receipt collection.
These could be the benefits the platforms like Boya provide yet we cannot necessarily measure but they bring quite huge benefits to your company. This includes:
Visibility and Control over expenses
The lack of visibility and control over spending is a big concern for businesses, and for sure a manual, paper-based workflow process just exacerbates the problem.
It’s easy to envision the finance team chasing spreadsheets and receipts for weeks if not months before an expense report shows up on their desk.
The fact that a lot of reports are missing key information or are submitted long after they occur makes it hard to grasp a real-time picture of the financial situation of the company.
A great expense management software helps put an end to this by enabling the finance team to see at a glance which reports are late, and which documents might be missing, enabling them to request clarifications from the employee who submitted the report.
Companies that fully adopt expense management systems like Boya mostly experience a reduction in errors and are able to better enforce their expense policy.
Increases productivity and happiness
Managing expenses is not only an issue for finance people, in fact, but employees on the road can also become frustrated when they have to spend hours filling their expense reports, scanning their receipts, and then waiting weeks to get reimbursed.
All the hours wasted in the process are time not used reaching clients, closing deals, and ultimately improving the bottom line.
Here, mobile technology can come to the rescue. A business expense app can help employees record their expenses and submit their claims on the go.
Apps like the Boya App also enable employees to easily load money from their own M-PESA wallet in case they go beyond the limit and can always and quickly get a re-reimbursement.
This allows the company to capture the correct data at the source, reducing errors. After that, processing claims automatically will speed up reimbursement and make everyone happy.