Effective implementation of the travel expense policy enables organizations to manage and control travel costs. Managing a constant flow of travel requests and processing reimbursements can be overwhelming. The travel expense approval system aims to streamline expense reimbursement by identifying policy violations. It brings accuracy to expense reimbursements by eliminating the scope for human errors. Advanced travel expense approval systems allow easy access to travel expense data for gaining meaningful insights into travel spending. Keep reading to learn ways to improve the approval process in an organization.
What is a travel expense approval system?
In the entire travel expense management process, approval of expenses is the most vital step. The expense approval helps track and control travel costs by eliminating expense policy violations. Expense approval processes cover the following:
- Creating and communicating a travel expense policy to stakeholders
- Defining limits for travel costs
- Expense reimbursements
- Travel expense tracking
- Notifying employees about travel policy violations
- Identifying opportunities to save travel costs by expense data analysis
The travel expense approval typically involves:
- Employees incur expenses for business travel
- Employees prepare expense reports by attaching relevant bills and receipts
- They submit expense claims to line managers
- The claim approval or rejection by the line manager
- The accounting department receives expense claims after approvals
- The final step of claim reimbursement
Why track employee travel expenses?
Employees are likely to deviate from travel expense guidelines despite clearly communicating the expense policies of an organization. These deviations may be human errors or expense fraud. Employees may misinterpret guidelines or incur expenses without pre-approval.
Small and medium businesses should adopt an appropriate travel expense management system for streamlining expense approvals. The following are a few reasons to design an effective and flawless expense tracking system:
1. Possibility of human error: There is a probability of errors in the claims processing if using a manual expense approval system. Filling out and checking complex expense report forms is a tedious process, besides being prone to human errors.
2. Losing paper receipts: Expense reimbursement is uncertain if employees misplace receipts for certain travel expenses.
3. Travel bookings without authorization: Expense tracking is essential to avoid unauthorized travel bookings that may not come to the notice of accounts staff.
Travel expenses are vital for business growth, though these contribute significantly to the overall operating expenditure of an organization. Controlling travel costs through effective tracking is necessary for managing the expense approval process.
Benefits of managing travel expenses
Managing travel expense approval by creating workflows facilitates the finance department and travel managers. Compliance with the company’s travel expense policy is better, as employees can access pre-approved expenses.
1. Ability to track expenses
Travel managers gain better clarity about costs and the purpose of travel requests. Approvals become easy with the justification of costs.
2. Stronger control over travel expenses
An efficient travel expense approval system empowers line managers to approve or keep the travel request on hold by asking for an explanation for such a request. The finance department has better visibility into business travel expenses.
3. Greater compliance
A travel expense approval system ensures seamless compliance with the travel expense policy. Setting limits to travel expenses or using a daily allowance system can improve compliance with the travel policy.
4. Prevent policy violations and frauds
A flawless travel expense approval system can detect travel policy deviations in time. Finance staff can identify instances of expense fraud for necessary actions.
Suggested Read: Top 9 Corporate Travel Expense Tracking Apps And Platforms
How to automate expense approvals
Here are broad guidelines to automate expense approvals:
1. Define objectives
Setting clear goals for the travel expense policy is crucial to ensure clarity of the process and purpose. You should identify the existing flaws and limitations of the current expense management process to determine the organization’s goals.
2. Mark information necessary for approvals
Select the main items that are mandatory for the approver to arrive at a decision. It will simplify the job of the approving authority and expedite the expense approval process. Further, one must define the timeline for the approval.
3. Identify the steps for expense approvals
After defining the goals of the expense policy, create steps beginning with fund requests by employees and ending with the final reimbursement to the employee. These may include various roles and responsibilities throughout the travel expense approval process. You should set timelines for each step and determine the nature of the payment system and accounts of employees who will receive reimbursements.
SaaS-based expense management programs like Paxes speed up each step of the expense approvals. It is a timesaving resource for each stakeholder, such as employees, line managers, travel managers, and finance staff. With such travel expense approval system, employees need not worry about expense deductions at the end of the month.
Suggested Read: How To Efficiently Use Travel Expense Reporting In Corporates
Travel Expense Approval System FAQs
What is travel expense approval?
The travel expense approval ensures compliance with the travel expense policy and controls costs by preventing overspending.
What should a travel expense policy include?
The travel expense policy is a set of rules for spending funds on business travel. It aligns the travel policy of the organization with the business travel expenditure.
Which authority in the organization handles travel expense approvals?
Usually, line managers in the organization have the authority to approve expense reports.
How does the travel and expense management solution enhance the approval process?
The travel and expense management software ensures real-time processing and tallying of the expenses for speedy reimbursements. Real-time request and approval facilities eliminate waiting and uncertainty of the travel expense, which requires approval.
What is the significance of business travel expenses?
Business travel expenses are essential for business growth. These are tax deductible. An organization must maintain proper records to prove the authenticity of expenditures for business objectives.
