PA Student Diaries

Successfully managing expense accounts records is an involved process requiring knowledge of accounting and the policies and procedures related to expense reporting for the company you work for. One important consideration is who expenses have to be approved by in order for the party to be reimbursed or who the expense process must go through when reimbursement involves sums over a certain dollar amount. Almost all expense management systems have some form of approval hierarchy that takes into account these matters. Usually approval goes through various levels with regularly occurring expenses going through a unit level manager for approval, or perhaps being cared for as an auto approval through an automated expense management system.

Audit trails allow expense information to be tracked so that any discrepancies can be quickly located and fixed. Unfortunately, fraud is a fairly common problem in expense reports and the quicker a problem is spotted, the faster it can be rooted out. Knowing how quickly automated expense management software can spot fraud can also be a deterrent from attempting it. If a company is very large, there may be such a large variety of expenses that employees can incur that a different manager may handle different types of expenses. Automated systems can take this into account and send the expenses that the manager needs to approve directly to them. This sorting process means that none of the managers ever have to determine whether an expense is valid in a category that they are not familiar with.

An automated expense management system can also allow you to automatically flag any expenses in a particular category that exceed a certain amount of money. These blocks are part of the policy rules that govern the expense reporting process. In fact, these flags or blocks can even be customized to let the user know why the expense they reported is not valid. Most employers want to keep their employees in the loop about the expense process and an automated expense management system allows for customized email alerts and messages to be sent out with pertinent information regarding a particular expense report, or with information about when to expect a reimbursement check.

Also, with regard to automated systems, a certain amount of built in error correction is definitely useful. For example, duplicate submissions of expense information are a problem that arises fairly often. In an automated system, the manager and the employee are alerted to any duplicate submissions of information so that this problem can be rectified. A manager also does not want to give employees an indefinite amount of time in which to submit expense reports. Time limits on the submission of expense items can be built into the automated system to ensure that employees submit their information in a timely fashion. Itemizing information from receipts and bills is another important task since this is useful not only to determine what expenses should be covered, it also may be necessary for tax purposes. Knowledge of the details that make for a good expense management system can take the hassle out of choosing one for your company.

Expense On Demand Ltd
Abbey House
28-30 Chapel Street
Marlow
SL7 1DD
0870 366 2300

Some expenses management systems also incorporate time management capability, usually aimed at improving resource utilization and billing effectiveness. It’s important to distinguish this kind of capability from full-blown Time & Attendance (or Time & Labour) applications that are designed for comprehensive operational management, usually in hourly-paid environments, and help organizations capture data electronically, process it against pre-set rules, and carry out different forms of analysis such as absence expense tracking. In many cases, these systems will be over-specified for organizations whose main concern is to assess how effectively professional salaried staff are being deployed.

See ‘Multi-country Payroll and Time Management: A practical approach to improving efficiency, control and management information’, published by Webster Buchanan Research August 2004 (www.websterb.com)

While the capability of these time management modules will vary, data captured by these systems allows organizations to:

* Analyse how effectively billable and non-billable resource is being deployed

* Assess whether all time is being charged out to maximum value

* Determine overtime incurred on specific initiatives for better cost analysis

* Compare resource allocation on a site by site basis

Finally, organizations that bill time to a third party are also often entitled to charge related expenses. By managing both time and expenses in the same central system, it’s easier for employees to allocate those expenses correctly to external clients and the rate of chargeback is likely to improve.