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Expense Reports, a Human Resources Topic

Expense statements are generally considered purely accounting matters. But when the flow of processing statements in the company is difficult, involves paper forms with many unclear rules, or often causes a lot of headache for employees, it becomes an HR topic. If it impacts morale and lowers productivity, it must matter to HR. And if it's creating financial problems for employees, it's definitely a human resources problem.

Expense Reports, a Human Resources Topic
Table of contents

1. The expense reports management process

  1. Create administrative work for employees
  2. It requires unpleasant work for employees and low productivity
  3. It can create tensions between teams
  4. It creates financial pressure on some colleagues

2. How do I improve the management of employee expenses?

  1. Consideration of the needs of all actors
  2. Eliminating paper statements
  3. Use of mobile phone for expenses
  4. Other process improvements

3. Inadequate internal processes must matter to HR

 

1. The expense reports management process

Expense reports are generally considered purely accounting issues. The CFO creates the process and establishes the rules, which the employees must follow.

When the flow of processing statements in the company is difficult, involves paper forms with a lot of unclear rules, or is generally a big headache for employees, it becomes an HR topic.

1.1 Create administrative work for employees

Adding an expense to the expense reports can take between 2 and 5 minutes. This time multiplies with each added expense. Approval by the manager can also take between 2 and 5 minutes. The financial compliance check (with internal policy or fiscal or accounting rules) of the expense report can take 10 minutes. It can be estimated that the whole process can consume at least 20 minutes per account at the company level.

1.2 It requires unpleasant work for employees and low productivity

For employees and managers it is a boring, tiring and tedious process. Even if those from the financial/accounting team generally create the spending policy and process, they don't enjoy them either. Especially during a period of closure, the period (month, year) when it is ensured that the accounts contain all the receipts or corrects various errors.

Being an unpleasant job for all the actors in the process, it is hard to believe that it is carried out with the highest productivity.

1.3 It can create tensions between teams

The expense reports involve multiple actors: the applicant (employee), the approver (manager) and the processor (financial/accounting). In order for the expense report to go through the entire chain, emails with all actors are needed and sometimes even in paper format.

Sometimes the policies are not clear or insufficiently understood by the applicants. All exchanges require clear communication and empathy to bring the process to a successful conclusion. Often, however, it leads to contradictory discussions and misunderstandings.

1.4 It causes financial pressure on some colleagues

For the cases in which we are dealing with occasional and small expenses, the problem is greatly mitigated. For roles in which these are frequent and of high value (for example, employees who travel almost weekly), making expenses from their own funds can, at least, create the feeling of financial instability. Situations may arise when unreimbursed or repaid accounts accumulate over long periods of time. In this case, we have cases of real financial pressure on employees.

If we were to summarize, in the best case, the process of managing the statements creates additional work with administrative work - unproductive and ineffective, which can often mean stress. In other cases, it can create tensions between colleagues. In other cases, it can create real financial pressures on employees.

That's why establishing smart expense reports processes is more than just a finance team goal—it should be an HR goal, too. Here's why improving employee expense management should be an HR goal.

2. How do I improve the management of employee expenses?

The optimal implementation would consider the needs of all actors, as well as a series of (good) practices, such as making expense reports in digital form and using mobile phones.

2.1 Consideration of the needs of all actors

A fair process addresses the needs of each actor

Applicant (Employee) – My Expenses / Expense reports

  • Import supporting documents
  • Create and send a expense report
  • Follow the refund status

Approver (Manager) – My Team's Expenses / Expense reports

  • Alert when a new expense reports from my team is sent
  • Validate or reject the expense report / statement
  • Makes employees aware of their responsibilities

Processor (Financial-Accounting) – Analysis

  • View the company's expense reports
  • View the expenses of a specific employee or group of employees / teams
  • Filter expenses by category

2.2 Eliminating paper expense reports

Most of the administrative problems come from the fact that some companies are (still) paper-based. And really, the only reason they do that is because that's how expense reports have always been done.

Think about the small steps involved in each application:

  • Employees must find, print, and complete an expense report template.
  • They must also scan and send these documents – along with the paper receipts – or physically place them in the records system. (Which is impractical when working remotely...).
  • Finance then has to enter the same data into their own systems.
  • If something is incorrect or missing, the whole process is repeated. And the information is incorrect or missing all the time.

Making a expense report is quite unpleasant. But if you're processing tens or hundreds in a month, paper is a serious obstacle.

If you're focused on helping teams feel happy and respected at work, operational improvements make a big difference. So the reduction of paper documents is a great achievement in this regard. And technology makes it easy.

2.3 Use of mobile phone for expenses

The paper-based process can easily be replaced by a digital one. The same information can be entered, including the receipts / supporting documents using a software on the mobile phone. Faster and with fewer errors.

Instead of waiting until the end of the month to enter receipts, employees can do them on the spot. The moment they make a purchase, they simply record it in the app and take a photo of their receipt. And then they don't have to worry about it later.

This approach brings several benefits:

  • Information is more likely to be accurate, and the app guides employees through the process
  • employees upload the receipt immediately before it gets lost or damaged
  • each entry of the expense takes a little time
  • The expense report is completely digital

In this way you reduce the administrative stress for each actor involved. And you have a more efficient company as a bonus.

2.4 Other process improvements

Early reimbursement of expenses incurred by employees is possible due to the introduction of expenses right after they realization. The expense reports can be made more frequently and implicitly also reimbursements. This is a subject for which HR must make very clear the expectations to the financial and accounting team. And this must find payment automation solutions to allow these frequent reimbursements to be made.

The HR managers must also be the catalyst that encourages the financial-accounting teams to find solutions by which the expenses are realized as little as possible and only occasionally from the employees' money. This could mean the wider use of company cards or invoices paid directly by the company.

3. Inadequate internal processes must matter to HR

Modern HR teams have many responsibilities. But whether the focus is on remote working conditions, benefits, career advancement, or just paying people on time, the core mission is the same: to keep team members happy and fulfilled at work.

Which goes back to the basic thesis of this article: Inadequate (bad) processes are an HR problem. If they affect morale and decrease productivity, they are a human resources problem. And if it's creating financial problems for employees, it's definitely a human resources problem.