Controlling the risks of traditional expense processes

Kayley

04 January 2022

The traditional expenses process has always been an arduous task for the accounts department.

End of month reconciliations are not only tedious and labour intensive, but they also distract staff from getting on with work that can help take the business forward.

Also, when it comes to expenses, the traditional manual method can be fraught with issues that have potential to hamper the business.

Loss of receipts 🧾

Unfortunately, it’s not uncommon for receipts to go missing. The requirement for employees to retain pieces of paper for submission on a set day always runs the risk of one or two getting mislaid or lost. The result of this could be that employees lose out on their expenses claim.

Missing receipts also have a downside for the business. Failure to provide proof of an employee’s outlay means the business can’t claim the VAT back from HMRC.

Automating the process 🔄

One of the ways in which companies can mitigate the resource drain of administering expense claims is to automate it.

A digital platform takes the strain out of the process, freeing up staff to concentrate on other more strategic tasks. 

For employees, reconciling receipts on an automated system is far easier because they can upload photographs of each receipt they collect at the time a transaction takes place. With the receipt safely stored in a digital format, there are no concerns about lost paperwork. 

Easy administration ✅

Swapping out traditional methods of expense handling for an automated system is much more time efficient.

Setting up staff members, and their allowance limit, is a faster process than doing it manually, while deactivating staff who are no longer with the business is quick and easy.

Importantly, any cards associated with the employee will be deleted at the same time so there’s no financial risk to the business. 

Integration 👨‍💻

Digital expenses platforms integrate with accountancy management software, making the reconciliation process smoother.

Platforms like Expend integrate with software such as Xero and QuickBooks, automatically updating key financial data so your accounts never fall behind.

And, because it’s an automated process, there’s little chance of human error, resulting in reliable, accurate data that meets HMRC requirements. 

There’s an app for that 📱

Providers like Expend have a mobile app that allows employees to register their expenditure as and when they incur it.

It’s quick and convenient, saving time and reducing the prospect of lost receipts. As their allocated card is used, the system will remind members to provide a photo of the receipt so their account balances as they spend.

The smooth processing of expense transactions through the app into the business’s accounting software also helps with cash flow.

The final say 💬

Processes and communications have become faster and more secure as technology has evolved, making traditional labour-intensive jobs a thing of the past. Employees have embraced digital expense platforms because they are convenient and make life easier. 

From a business perspective, these platforms provide a simple way of managing a fundamental part of the business. It not only helps the company remain compliant with HMRC, but releases accounts staff to spend time to focus on growing the business.

Ultimately, those companies that are still operating on a slow manual expenses management system are at risk of being left behind.

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Disclaimer: This is not legal, accounting, or tax advice - it's simply a guide. If you need help, check with your accountant or contact HMRC directly.

Kayley

Head of Marketing

The driving force behind all-things-marketing, fuelled by coffee and true crime documentaries.

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