ROI on Expense Management Solutions: Why it’s Worth the Investment
Many businesses are aware that manual and paper expense solutions waste time, yet they still find it hard to justify the cost of expense management software.
Smart financial decision-making begins with assessing the potential return on investment (ROI) before investing in a solution, however.
In this article, we break down the ROI on expense management solutions, as well as reveal why it’s worth the investment. We’ll share both the quantifiable and non-tangible benefits with you too, to help you truly determine what your business has to gain.
Calculating the ROI on Expense Management Tools
The following criteria are considered when determining the quantitative ROI of expense management software:
How long it takes an employee to complete an expense report
The average hourly wage of an employee
How long it takes a finance team member to process an expense report
The average hourly wage of a finance team member
The average percentage of expense reports containing errors
Generally, these figures can be obtained rather easily. However, we can also look to research from the Global Business Travel Association, calculated in GBP, to give us a more generalised overview of the ROI on expense management solutions.
According to the research:
20 minutes is the average time taken to complete an expense report
£37.96 is the average cost of processing an expense report
Up to 20% of expense reports contain errors
18 minutes is the average time taken to correct an expense report
£34.03 is the average cost to correct an expense report
If we assume you’re using a manual spreadsheet system for expense tracking and receive 20 expense reports each month, you could expect the following:
400 minutes spent by employees completing expense reports
£759.20 to process the expense reports
4 expense reports containing errors
360 minutes spent by finance team members correcting expense report errors
£680.60 to correct expense reports
Using these figures above, the total cost of manually managing expenses would equal £1,439.80 (the total cost of processing + correcting the expense reports) each month.
This equates to £71.99 per expense report, per month.
These figures are just an example of how much your company can save, but actual costs will vary depending on company size and spend.
Automated expense management software, like ExpenseIn, costs as little as £3.80 per active user each month. With features such as receipt scanning, automated policies, advanced approvals, real-time reporting, and card statements, it significantly reduces not only the time spent submitting and approving expense reports, but also the number of errors contained within them.
Unquantifiable Benefits of Using Expense Management Software
Now that we’ve explored the quantifiable ROI on expense management software, let’s take a closer look at the intangible benefits it can provide. These are things you can’t necessarily measure, yet which still provide immense benefits to your company.
Higher Employee Satisfaction
When employees feel as though their out-of-pocket expenses aren’t being reimbursed quickly, they can begin to feel resentful and as though their time and money isn’t being respected. Don’t just take our word for it though. According to a survey of 2,000 UK employees, as many as 25% of workers have postponed or cancelled meetings to avoid paying the cost out of pocket. Additionally, over 30% said they have felt “financially unstable” due to having to pay substantial or unexpected work-related expenses.
Easier HMRC Compliance
Expense management software is vital to company owners, particularly when it comes to remaining HMRC compliant. This is because it takes the anxiety and stress out of expense tracking and makes the process of a potential audit smoother for everyone involved.
Receipts can be archived digitally, eliminating the need to track down old documentation, and managers can be held accountable for the approval of every expense transaction. Additionally, those transactions can be conveniently linked back to the employee. The software also provides complete financial reporting in seconds, ensuring that you have the most accurate data to provide to HMRC.
Ease of Use
Manual expense management processes can be tedious and leave many employees unclear on how or when they should claim. Expense management software, such as ExpenseIn, allows claims for purchases, mileage, and time to be collected in a matter of seconds.
It brings everything you need to create, approve, and report on expenses into one easy-to-use package. ExpenseIn even helps you to dramatically reduce the time spent on pointless admin tasks, thanks to features such as automated push and email alerts, automatically enforced policies, and automated receipt verification. You can even access it anytime, anywhere via the ExpenseIn mobile app, which lets you create or approve expenses on the go.