Less manual work: How the right expense system frees up your finance team

The problem starts before the claim reaches finance

The finance or payroll team’s work often comes at the end of the expense process, and their workload is directly linked to what has happened earlier on.

If employees haven’t been guided to submit the right supporting documents, their claims have to be sent back and additional information requested. If managers have approved claims out of habit without reviewing the content, the errors end up with finance instead. And if the system lacks automatic checks for policy and tax rules, it is again the finance team that has to find and correct the errors manually.

The most effective way to reduce the finance team’s manual work is therefore to solve problems upstream: with the employee, before submission, and with the approver, before approval.

What the system should catch automatically

A modern expense system should carry out an initial screening of every claim before it reaches an approver or the finance team. This isn’t about replacing human judgement, but about making sure that whatever reaches a person actually requires their judgement.

The quality of the automatic checks depends directly on how much the system understands about each purchase. Most systems extract the date, amount and currency. But a system that also understands things such as whether the document is a receipt or an order confirmation, whether a restaurant bill included alcohol, where the purchase was made and at what time, can carry out checks that a basic system simply cannot.

With this understanding of the purchase, the system should be able to, for example:

• Identify whether the document appears to be a valid receipt, and otherwise ask for the correct document
• Check whether a purchase breaches policy and explain why, so the employee can correct it before submitting
• Flag duplicates based on more than just amount and date
• Cross-check entries, for example flagging when a meal deduction is missing from a per diem claimed for the same day

The more the system understands about each purchase, the more of what the finance team currently does manually can be automated.

Approval workflows that respond to the content

A large part of the finance team’s work involves handling what other approvers have either missed or are not qualified to assess.

Most organisations copy their invoice workflow when designing approval routines for expense claims: the line manager approves, and amounts above a certain threshold are escalated. However, expense claims differ from invoices in several important ways. The purchases are usually not pre-approved, as they are with suppliers the company has agreements with; the volume is higher, the amounts are lower, and a single claim can contain dozens of very different items. As a result, managers usually either approve everything without reviewing it, or spend a disproportionate amount of time on trivial items.

A system should flag things a reviewer ought to pay attention to, but a smarter workflow can also respond to what is actually in the claim. Costs booked to software could go straight to the CTO for review; a client entertainment bill where the reviewing manager was one of the attendees should automatically bypass that manager and go to the next level; and expenses including alcohol might trigger an extra step with finance. Spot checks can be used to catch anything that passes through automatic approval.

This not only reduces the finance team’s workload, but also makes the review process more meaningful.

Tax handling that actually works

A time-consuming task is correcting tax errors that the system can’t handle: incorrect VAT treatment, entertainment expenses booked without the correct split, or per diems calculated incorrectly for a particular country.

Asking a vendor whether their expense system supports tax handling in a particular country rarely gives a meaningful answer, because the answer is almost always yes. What matters is how the system supports it. A system that handles tax by requiring the employee to remember the right sequence of clicks, or the finance team to set up a workaround, doesn’t really support the rule. It simply passes the problem on.

Automation should go all the way. Involve representatives from your local markets when evaluating systems. They know which scenarios are critical and can ask questions you would never have thought of.

Analysis and visibility

A finance team that spends most of its time reviewing and correcting individual transactions has little time left to understand where the money is going and why.

A good expense system gives the finance team visibility into the entire organisation’s expense data. Naturally, it should be possible to filter by company, cost centre, category and time period. But there are other dimensions that are often overlooked. How much does the organisation spend with different suppliers? Is there an opportunity to negotiate volume discounts or consolidate purchasing? How efficient is the review workflow, and where do delays occur? And for organisations with sustainability goals, how much CO₂ does the organisation’s travel generate, and how is it distributed by department or country? These are questions that either take a lot of time to dig out manually, or never get answered at all if the system doesn’t support them.

Questions to ask the vendor

1. What automatic checks does the system offer, and how are they configured?
2. How deeply does the system understand each receipt? Can it see more than the basic fields?
3. How does it handle approval workflows that respond to the content of the claim, not just the organisational structure?
4. How is tax handled in the countries you operate in?
5. What analysis tools are available for the finance team to follow up on expense data?