5 reasons to go digital!
By Deborah Saunby, Sales & Marketing Director
06 March 2020
A large number of businesses [50 per cent] are still storing staff receipts in paper format. The problems associated with paper-based receipts include the storage of the paper receipts and associated costs with doing so. Further complications include staff losing receipts or providing torn or damaged copies, as well as providing stacks of paper for many months’ worth of unclaimed costs that they demand reimbursement for.
Payroll teams are often then left trying to balance the books at the end of the month using a reams of staff receipts. The challenge is relative: for smaller organisations that may not have internal payroll support the issue is one of re-allocating time to the task. For those teams that are managing hundreds of expenses claims the challenge is the same, but larger in scale, and will require a dedicated team. Manual checking of paper receipts is not only hugely time consuming, it also means the chances of spotting claim errors or intentional over-claiming are difficult. The challenges here would include processing old or out of date expenses, processing a duplicate claim and paying out by mistake, but most importantly, businesses could be missing out on VAT reclaim opportunities.
There are numerous companies across all industries and sizes in the same, confusing position. If you’re storing and checking staff expenses receipts in paper format, you’re not alone.
Have you ever considered how long it takes each of your employees to find, check and file their expenses receipts; to unfold each receipt and check it for dates, VAT numbers and item descriptions? Even if it only takes 45-60 seconds per receipt to check the basics, can you imagine how much time that adds up to for your entire workforce over the course of a month or a year? The complexity of information receipts contain and, details required by HMRC for compliance, is growing.
What’s more, have you ever thought about how long it takes your team of line managers and payroll officers to review and approve each of those receipts? Line managers need to ensure each receipt matches the claim description and expenses policy, and payroll must ensure each receipt has the necessary information to qualify as both a business receipt and VAT receipt.
Digital expense receipts and claims have an enormous impact on time. Claimants can snap receipts on their phone and submit with ease, whilst finance teams can then replace manual tasks with fast and efficient automated processes.
Other efficiencies include real-time checks and notifications. Alerts regarding out of policy claims are flagged to claimants before submission which prevents them being submitted only to be returned by finance for further justification. Real-time progress of claims means it’s easy to check the status of a claim and reduces calls and enquiries to the finance department.
2. Reduce Costs
There are a number of areas in which digital expenses will provide costs savings. The most obvious and immediate one is to reduce your expenses spend.
The top main reasons your expenses spend could be higher than it should be are usually down to the following five areas.
- Prevent duplicate claims
This is one of the top ways in which you could be paying more on your expenses, so how does it happen? We’ve found that in most organisations where claimants use paper or excel spreadsheets to capture claim details and then submit to finance for payment; duplicate claims are in high volumes.
Reasons for duplicates include:
- Delays or long periods between submitting claims and getting paid often encourage employees to submit them again, believing they’ve been lost or misplaced.
- Employees knowingly submitting claims again.
- Multiple people processing claims duplicating the processing and payment runs.
- Accurate mileage
We mentioned before that business mileageis one of the biggest expense items for many companies. With high volumes of managers and representative out on the road, getting their mileage reimbursed quickly and easily is a must.
Reasons for rounding up mileage include:
- Claimant having to calculate their own mileage for journeys using whichever route planner or map system they choose.
- Discrepancies in whether they use postcodes or street addresses.
- Claimants having to add up many short journeys, which can be quite cumbersome, and easier to ‘guestimate’.
- A straightforward round up of mileage to add a few more miles, knowing that this is not validated.
- Maximum VAT reclamation
This directly links to the point regarding missing receipts. If you’re not collecting receipts then you’ve no way to calculate how much VAT you can claim back, and for many organisations this represents thousands in lost reclamation.
Digital expenses allows you to control all of these areas and ensure you keep your expense spend in check.
3. Spend analysis
Digital expense reporting allows data to be aggregated so that expense spend by projects, customers, employees/departments, is visible and can identify spending patterns across departments to spot potential inefficient or wasteful spending. Your finance teams can then work with employees to create (or enforce) more efficient expense practices for your employees.
Full visibility of your expense spend enables your finance teams to:
- Deliver savings.
- Improve processes.
- Manage out of control spend.
- Benchmark Relative Position.
- Quantify your savings.
- Policy enforcement
This is one area many organisations struggle to manage. It’s all very well having a policy in place to provide guidelines of what can and can’t be claimed for and how much. However, if your process makes it difficult to reference the claims with the policy, you may find that you’re reimbursing employees over their limits for items they’re not allowed.
Reasons out of policy claims are reimbursed include:
- No actual expenses policy.
- No system in place to check employee allowances against claim items.
- No system in place to check claim amounts against limits.
Enforcing your company’s expense policy is an essential part of expense processing. Many companies have specific business or division-level guidelines, as well as parameters associated with specific projects or clients. Digital expenses allows organisations to control spending by automating policy enforcement. Out of policy expenses are instantly flagged upon submission, also reducing reimbursement delays due to claims being returned by finance for extra justification.
- Receipt validation
Receipt validation services. The amount of time lost may sound bleak, but the reality is potentially worse! In our receipt handling facility, our rate of return i.e. receipts we return to our customers’ employees for extra checks, is anywhere between 10 – 60% of total receipts. This does depend on the ‘expenses maturity’ of the business, or how well educated the employees are in terms of what can and can’t be claimed. If your line managers or payroll teams are returning receipts and asking staff to re-submit claims, it’s adding extra time to the already unnecessarily lengthy process.
Common compliance issues with receipts
Employees submitting receipts with no dates or they have scanned the front of the receipt, but actually the date is on the reverse, which they didn’t scan.
We see people submitting receipts via the wrong cost category i.e. claiming an item is entertainment [and not eligible for VAT reclaim] when actually it was a subsistence.
We often see employees ‘cutting off’ the bottom of receipts to hide its true value and attempt an over claim.
Un-common but true!
Here are some less common examples, perhaps some of the worst we have seen, but they serve as a good example of the frustrating challenges your line managers and payroll officers will be dealing with.
Someone recently submitted to us a photo of a coffee cup, as part of their subsistence claim.
Another person took a photo of a parking sign to show – presumably – that he had parked his car for company business.
A third person took a photo of a petrol pump in some failed attempt to make a mileage claim!
Each of those examples were submitted without a receipt, instead using photos of coffee cups, petrol pumps and parking signs – whilst amusing, the time it takes to reconcile these expenses is lengthened.
5. Mobilised workforce
Most organisations have already bought into the benefits of cloud-based applications. With millions of smartphones being used in our global workforce, these same cloud benefits easily extend to mobile devices, including tablets.
Claimants can use their smartphone camera to capture digital photos of their receipts as expenses occur. Approvers can process expense claims without having to be back in the office or near a computer. Mobile expense apps also allow for the capture of mileage, check claim statuses or reconcile corporate card statements.
A mobile workforce is a happier workforce – and more productive too.