Travel expense reporting is one of the most important administrative functions in any organization, but since it does not directly generate revenues, you need to keep it as lean and efficient as possible. This article explains how to automate travel expense reporting. It discusses why travel and expense automation is so important and the steps to expect as you go along this digital maturity journey.
Travel is probably one of the three major expenditures in any organization, along with salary and infrastructure, regardless of where the business is based. All of this investment makes it essential to monitor where and why money is being spent.
That is what travel expense reporting aims to achieve. However, with a growing business and an ever-increasing number of expenses to track, travel and expense (T&E) management can put undue pressure on your HR and finance teams. As a result, more organizations are looking to automate travel expense reports, in order to reduce effort, minimize errors, and bring down the operating expense (OpEx) involved in this crucial administrative function.
Travel expense reports are physical or electronic records that include all pertinent information on a travel-related expenditure, including the date, amount, and category. Original receipts are often included with T&E filings so that businesses may present evidence of reimbursable costs in the event a tax return is ever scrutinized.
A travel expense report will typically have:
There are several reasons why travel expense reports are essential:
Unfortunately, travel and expense management is often a manual process in most organizations. This leads to reduced efficiency for finance teams and employees, as well as additional expenses for organizations. In addition to conducting research and organizing traveling itineraries, a significant amount of effort is devoted to obtaining permissions, data input and validation of claimed expenditures, providing timely-filing reminders, clarifying rules and procedures to employees, etc. 2021 research found that 68% of companies still use a manual method to enforce T&E policies!
Completely automating this process may enhance its transparency, save money and time and improve compliance and accountability.
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Modern T&E technology lets you modernize and automate the process of travel and expense management end-to-end. Consider a portal in which, when an individual starts to arrange a tour, the T&E software instantly displays the spending limit so they understand how much can be spent.
You can also automate the compilation of expenditures so that employees don’t have to compute their trip expenses. The program can determine it depending on the location, current market prices, per diem fees, if applicable, and other factors.
Following this, we arrive at the next stage — travel expense reporting. By automating this portion of the travel and cost management system, you can save your finance teams and employees a substantial amount of time.
With mobile integration, workers can easily submit images of their receipts and electronically transmit data while on the go. Using the technique of Optical Character Recognition (OCR), the T&E software will then extract receipt data and populate expenditure information. After submitting all receipts, an employee may produce a travel expense report in minutes. Due to the ease of processing, reports may be submitted on time.
Also automated is the request for travel and cost authorization. As soon as the employee submits a request, the costs may be quickly authorized or denied. After receiving clearance from the accounts department, you may set up an automated data transfer procedure to notify the accounting department that a reimbursement is due.
Automated travel expense reporting is central to this upgraded, digitally-enabled T&E function.
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Here are five indicators that your systems for reporting travel expenses should be automated:
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There are four aspects of the reporting experience that you can automate. These reduce efforts for both the employees submitting reports, as well as accountants processing them.
Automated controls will guarantee that travel expense reports always adhere to the organization's policies. The T&E management software can be programmed to issue travel policy notifications to workers making reservations. You will be able to send notifications for policy violations when individuals attempt to book flights or accommodations that exceed the permissible amount. Inversely, you may send out missed savings notifications when they choose a more expensive option while a comparable, more affordable alternative is available.
An automated T&E system enables your workers to record costs in real time. With OCR technologies, they can automatically scan their bills as well as avoid retaining multiple receipts and bills. Some solutions even support prepaid cards that convey the details of the expense incurred back to the organization in real time.
Using automation, employees may record costs while on the go, and the HRMS, ERP, etc., is immediately updated. Typically, T&E systems will integrate with Gmail and Outlook so that expenses may be generated immediately from the inbox as opposed to an app.
By automating the process of managing travel expenses, individuals may provide digital information while traveling and upload images of their receipts. The automated T&E system subsequently pulls details from the receipts and populates expenditure data into structured fields. After entering all receipts, an employee may create a report of expenses promptly. Further, if any data field is missing, the employee will be alerted immediately.
Approving travel and expense claims is usually a long-drawn process because managers need need to examine expense reports for overspending. However, the process can be accelerated when they arequickly notified of reports, including improper expenditures and overspending. With systems to automate this process, you can set up multi-level approvals by automatically notifying all the approvers immediately and following up on time. This helps prevent fraud, without adding more complexity.
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Most companies begin with a manual, paper-based travel and expense management practice, and then gradually evolve into a digitized and automated reporting process. This transformation does not take place overnight – if you are undertaking the automation journey, your organization will go through the following stages of maturity:
The first stage in the complete automation of travel expense reporting is the formulation of a comprehensive expense guideline and policy framework. The policy should contain information about air travel, transportation, lodging, per diem, cash transactions, and business credit card expenses. In addition, it must contain approval structures, reimbursement process workflows, approved and unapproved expenditure catalogs, and so forth.
Next, you need to choose the right automation software. This can be a standalone script that only applies to the reporting process (data capture and data transfer to finance). But typically, the tool is embedded into a T&E management software that automates repetitive tasks for employees, managers, accountants, and auditors alike.Prioritize the few solutions that are best suited to your demands; ideally, create a shortlist and choose the one that works best for your workforce, preferably a cloud-based enterprise software.
Once the T&E management tool has been installed, it is time to configure the technology to automate your expenditure reimbursement processes. Set up connections between different systems, configure automated alerts, and create event triggers and schedules.
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The benefits of automated travel expense reporting are many. It eliminates the underlying losses associated with reduced productivity and fraudulent data entry. Employees have more time to concentrate on crucial functions. They feel more appreciated when performing project-related activities as opposed to tedious administrative duties.
Explore the benefits of T&E automation for your company. Ask for a Darwinbox demo today!