In most organizations, travel and entertainment (T&E) expenses are often overlooked as insignificant or unavoidable. Therefore, they do not immediately come to mind in the context of traditional supply chains. According to the Aberdeen Group, “Employee-initiated travel and entertainment (T&E) can account for one in every five operating dollars a business spends (with even higher percentages at service businesses).” Below is a discussion on automating expense management (EMA) as part of total cost management (TCM).
Combined expense reimbursement in manual, paper-based procedures, lack of policy enforcement resulting in long and costly process cycles with no reporting or analysis capabilities. However, times have changed and tough economic conditions in recent years have forced organizations to cut expenses and examine travel policies. As a result, business T&E expenses are virtually untapped areas for process automation and cost savings in all companies.
Organizations around the world are reducing direct costs, which account for 30-60% of overhead for most companies. Employee-initiated expenses, such as T&E, contribute up to 20% to these costs. However, traditional expense management systems are time-consuming, labor-intensive, and lack a policy enforcement mechanism. They also require significant staff resources, including managers and accounting staff.
Over the past decade, companies have invested in electronic enterprise resource planning (ERP), building a sophisticated TCM infrastructure, or better managing direct and indirect costs. However, little attention was paid to automating and optimizing employee-initiated expenses. According to Aberdeen Group, “EMA offers as many opportunities, if not more, as electronic contracting to control costs.”
Understanding of expenses
Many world leading companies with the most sophisticated ERP systems can provide details such as the exact quantity, location, and price of the smallest component of a commodity in their product supply chain. However, these systems do not track how much employees spend on hotels, where they stay, and / or how much they pay per night.
According to the Aberdeen Group survey, despite multi-million dollar travel budgets and 100% manual auditing of all expense reports for policy compliance, in most companies support of management functions T&E for employees is nonexistent or neglected. For example, senior sales executives could spend hours each week preparing expense forms, finding receipts, and sending the paper package (by express mail) to a manager for approval. Any problem with the report involves multiple rounds of phone calls, wasting time for employees and management. Also, if any out-of-policy spending is identified, managers generally view it with indifference. According to Aberdeen Group, many companies use employee reimbursement as a loophole to bypass accounting department, policies, and / or systems.
Overall, manual expense reporting has proven to be an inefficient, frustrating, and costly process for everyone involved – an area ripe for automation.
The power of EMA
As with any automated process, EMA is about improving collaboration, streamlining processes, controlling costs, and improving information sharing within and beyond the organization’s boundaries. EMA helps companies focus on bottom line and reduce costs by quickly and consistently gathering information on expenses, adhering to company policies, and improving efficiencies. Expense management automation is no different than automating any internal process, and is considered a strategic tool in TCM.
In addition to the manual method, there are other EMA methods, available in the market, including outsourcing and licensed software. However, the most cost-effective method is a 100% web-based application service provider. Web-based EMA solution providers are targeting companies that push the boundaries of business process automation and supply chain efficiency using the Internet. “Companies that have embraced web-based EMA solutions are reaping significant rewards … and they are also prepared for when the market starts to grow again, as they can do more with fewer A / P employees.
Many companies promised that the expense management process could be addressed simply by using sophisticated or financial ERP system modules. However, according to analysts, many best practice companies have found themselves turning to web-based providers for ease of use and implementation. Solution providers like iEmployee are addressing and solving real business problems, and companies that implement web-based solutions are realizing rapid and significant business value – value that translates into business benefits that were unattainable before the advent of technology. internet technology. Key advantage of web-based EMA:
In most organizations, travel and entertainment (T&E) expenses are often overlooked as insignificant or unavoidable. Therefore, they do not immediately come to mind in the context of traditional supply chains. According to the Aberdeen Group, “Employee-initiated travel and entertainment (T&E) can account for one in every five operating dollars a business spends (with even higher percentages at service businesses).” Below is a discussion on automating expense management (EMA) as part of total cost management (TCM).
Combined expense reimbursement in manual, paper-based procedures, lack of policy enforcement resulting in long and costly process cycles with no reporting or analysis capabilities. However, times have changed and tough economic conditions in recent years have forced organizations to cut expenses and examine travel policies. As a result, business T&E expenses are virtually untapped areas for process automation and cost savings in all companies.
Organizations around the world are reducing direct costs, which account for 30-60% of overhead for most companies. Employee-initiated expenses, such as T&E, contribute up to 20% to these costs. However, traditional expense management systems are time-consuming, labor-intensive, and lack a policy enforcement mechanism. They also require significant staff resources, including managers and accounting staff.
Over the past decade, companies have invested in electronic enterprise resource planning (ERP), building a sophisticated TCM infrastructure, or better managing direct and indirect costs. However, little attention was paid to automating and optimizing employee-initiated expenses. According to Aberdeen Group, “EMA offers as many opportunities, if not more, as electronic contracting to control costs.”
Understanding of expenses
Many world leading companies with the most sophisticated ERP systems can provide details such as the exact quantity, location, and price of the smallest component of a commodity in their product supply chain. However, these systems do not track how much employees spend on hotels, where they stay, and / or how much they pay per night.
According to the Aberdeen Group survey, despite multi-million dollar travel budgets and 100% manual auditing of all expense reports for policy compliance, in most companies support of management functions T&E for employees is nonexistent or neglected. For example, senior sales executives could spend hours each week preparing expense forms, finding receipts, and sending the paper package (by express mail) to a manager for approval. Any problem with the report involves multiple rounds of phone calls, wasting time for employees and management. Also, if any out-of-policy spending is identified, managers generally view it with indifference. According to Aberdeen Group, many companies use employee reimbursement as a loophole to bypass accounting department, policies, and / or systems.
Overall, manual expense reporting has proven to be an inefficient, frustrating, and costly process for everyone involved – an area ripe for automation.
The power of EMA
As with any automated process, EMA is about improving collaboration, streamlining processes, controlling costs, and improving information sharing within and beyond the organization’s boundaries. EMA helps companies focus on bottom line and reduce costs by quickly and consistently gathering information on expenses, adhering to company policies, and improving efficiencies. Expense management automation is no different than automating any internal process, and is considered a strategic tool in TCM.
In addition to the manual method, there are other EMA methods, available in the market, including outsourcing and licensed software. However, the most cost-effective method is a 100% web-based application service provider. Web-based EMA solution providers are targeting companies that push the boundaries of business process automation and supply chain efficiency using the Internet. “Companies that have embraced web-based EMA solutions are reaping significant rewards … and they are also prepared for when the market starts to grow again, as they can do more with fewer A / P employees.
Many companies promised that the expense management process could be addressed simply by using sophisticated or financial ERP system modules. However, according to analysts, many best practice companies have found themselves turning to web-based providers for ease of use and implementation. Solution providers like iEmployee are addressing and solving real business problems, and companies that implement web-based solutions are realizing rapid and significant business value – value that translates into business benefits that were unattainable before the advent of technology. internet technology. Key advantage of web-based EMA:
In Part II we have: