Part 2: Stronger Expense Management Optimizes the Way You Move Money OUT™

October 1, 2020
Average Read Time: 3 minutes

As we discussed in part one of the series, efficient management of your cash flow, including payroll, not only helps your business thrive, but promotes workplace loyalty. Additionally, managing your workers’ business expenses and reimbursements is another key aspect of cash flow that should be addressed.

According to BTN's 2019 Expense Management Survey, only 12 percent of leading organizations are approving expenses within a day, and only 10.5 percent are reimbursing employees within two days of the approval. While those approving and reimbursing within a day or two is not the norm, the survey found that 16.5 percent take more than five days from report submission to approval. The majority take up to four days, and 39.5 percent take more than two weeks from approval to reimbursement. This lag time can create cash management challenges for organizations in addition to a strain on employees.

The traditional expense report process is a task that few people enjoy—including your employees and your finance folks. Whether it is workers having to use their personal funds and wait for reimbursement, or accounting teams keeping track of petty cash, managing corporate cards, or recalculating the balance sheet for late submission of expense reports, the process is cumbersome all around.

Rethinking the operational processes around your expenses and reimbursements is key to creating a more supportive workplace for your employees.

The Traditional Approach

In the past, business expenses such as office supplies, travel expenses, fuel for company vehicles, or client entertainment might have been handled in one of three ways that typically required money out of pocket, an expense report, and a waiting period for the money to be reimbursed.

  1. Corporate Cards. If you had the right credit worthiness as a business, you might give your employees a corporate card. But what do you do if someone who normally doesn't take a client to lunch, needs to? Do you share the card? What If someone else needs it? How do you ensure that person understands what should and shouldn't be charged?
     
  2. Petty Cash. It’s tempting to keep petty cash on hand for unexpected business expenses like running out of printer ink or buying crucial tools or supplies to keep a project on schedule. Handing employees money might seem like an expedient option. But it's a manual process where employees request the cash, typically by filling out a form, then have to keep it separate from their own cash. After they make the purchase, they must keep track of the change and a receipt in the midst of their busy workday, and follow the process to turn it in. There are many opportunities for the paper trail to get lost, and most employees don't like being held accountable for carrying company money.
     
  3. Out-of-Pocket. The last option is to ask an employee to spend their own money and file an expense report. Essentially, you are asking that employee to loan the company money. If the expense is for attending a conference, there may be some big-ticket charges incurred such as airfare and hotel rates. It can take several weeks for the employee to file expenses, several days to process the expense report, and then time to receive the reimbursement. This causes financial anxiety for many people, especially junior staff that might not have the money to spare.  

In all these instances, you are dealing with paper and receipts with many potential points of error.

A More Efficient Approach

Let’s face it, the people who submit expense reports quickly are likely the ones stressed about using their own money, and those less strained by the outlay are most likely to wait until the last possible second to file expenses, creating an influx of last-minute tasks for your accounting team. That's creating stress for employees, creating delays in closing your books for the month, and obstructing your visibility into your business expenses and cash flow.

Pre-Imbursementssm is the new, groundbreaking way to take control of business expenses. It’s a solution that enables you to pre-authorize payouts to your worker’s personal card based on rules you define, such as maximum amount and name or type of store where it can be spent. When they use the designated card for authorized expenses within the parameters, the credits are automatically requested directly to the card with no effort by any employee. Additionally, it auto-reconciles the actual amounts once the purchases are made, with the balance of the maximum, pre-authorized amount never leaving the company's account, making it super easy for your finance team. The result? Happier, more productive employees.

At the end of the day, growth is all about gaining control of your money and creating a productive workplace. Of course, it’s about maximizing the money you bring in to the business. But those who optimize the way they move money out will gain the competitive edge and exceed their cash flow goals. Now there are new tools to get that edge through better ways to pay your people and business expenses.

 

Ready to modernize your payouts ecosystem? Learn how you can accelerate how you pay workers and expenses with our interactive guide.

  • CATEGORIES