How to Optimize Your Company’s Expense Management Process

Managing company expenses efficiently is a key factor in a business’s success. It’s not just about trimming costs but making sure that resources are allocated wisely, staying compliant with tax and company regulations, and driving business growth. Whether you’re a finance manager overseeing a team or a travel manager managing travel and entertainment costs, an optimized expense management process can help keep everything running smoothly and avoid unnecessary headaches.

Utilizing tools from an expense management solution and adopting best practices can transform how your organization handles expenses. This article will explore strategies to streamline and improve your company’s expense management process through automation, policy alignment, real-time tracking, and more.

Why You Need to Optimize Your Expense Management Process

The expense management process encompasses a wide range of activities, from tracking employee expenses and securing approvals to maintaining tax compliance and managing reimbursements. Without a well-defined system, expense management can quickly spiral out of control, leading to inefficiencies, increased costs, and potential compliance issues.

Many companies are still held back by outdated manual processes — leading to unnecessary delays, missed reimbursements, and a lack of visibility into overall expenditure.

Common Challenges in Expense Management

Here are some of the most common challenges businesses face when trying to manage expenses:

• Manual Processes: Relying on spreadsheets, paper receipts, and manual approvals not only prolongs the process but also leaves room for human error. These errors, whether a missing receipt or recording an incorrect amount, can result in inaccuracies that are tough to reconcile.
• Policy Non-Compliance: Without apparent, enforced policies, employees may overspend, submit late claims, or make purchases outside of company guidelines. This can lead to unnecessary costs.
• Lack of Data Insights: Incomplete or inaccurate data makes it difficult for finance teams to analyze spending, identify trends, or make strategic decisions.
• Delayed Reimbursements: Employees who don’t get reimbursed in a timely manner for their out-of-pocket expenses often become frustrated, which can affect morale and productivity.

Addressing these issues requires a structured and thoughtful approach to expense management.

Strategies for Optimizing Your Expense Management Process

1. Automate Your Expense Management Workflow

Automation is one of the most powerful tools for streamlining expense management. Relying on manual processes for capturing expenses, submitting claims, and approving transactions is time-consuming and prone to error. Automating these processes can drastically reduce administrative workloads while improving accuracy.

Benefits of Automation:

• Faster Processing: Automated systems allow employees to submit expenses instantly, managers to approve them quickly, and finance teams to process them without delay. This reduces reimbursement turnaround times and friction in the approval process.
• Reduced Errors: By automating data entry, such as through optical character recognition (OCR) technology for receipts, you can significantly reduce human errors.  No more misreading of receipts or manual data input mistakes.
• Real-time Insights: Automation provides a real-time view of your company’s expenses, allowing managers and finance teams to track spending in real time.

Did you know? With Navan accounting and finance teams save 8 hours a week on average with expense processing and reconciliation. 

2. Develop a Clear Expense Policy

A well-structured and clear expense policy promotes consistency and compliance across the organization. It sets expectations for employees and explains what is and isn’t acceptable regarding business spending. Additionally, it helps prevent employees from overspending or making purchases that don’t align with the company’s financial objectives.

Key Elements of an Effective Expense Policy:

• Spending Limits: Define limits for different categories of expenses, such as meals, accommodation, and travel. This helps control costs and avoid excessive spending.
• Approval Workflow: Establish a clear approval chain so employees know who needs to sign off on their expenses.
• Submission Timelines: Set deadlines for submitting receipts and expense reports. This reduces delays and prevents employees from accumulating too many outstanding claims.
• Reimbursement Process: Explain how and when employees will be reimbursed for their expenses. Transparency here is key to managing expectations and preventing frustration.

Regularly updating and adjusting your expense policy is essential to align it with your company’s changing goals and the latest regulatory requirements.

3. Leverage Physical or Virtual Corporate Cards

Issuing physical or virtual cards to employees is an efficient way to manage company spending. Connecting these cards to an expense management company platform, such as Navan, eliminates the need for employees to pay for business expenses out of pocket, reducing the reliance on reimbursements. This also allows companies to track expenses more accurately and in real time.

Advantages of Corporate Cards:

• Improved Tracking: Since all transactions made with corporate cards are automatically recorded, finance teams can easily keep track of spending without needing employees to submit expenses manually.
• Built-in Compliance: The card can contain spending limits and restrictions to help prevent employees from overspending or making unapproved purchases.
• Fewer Reimbursements: Corporate cards eliminate the need for employees to pay for company expenses with their personal cards, reducing reliance on reimbursements.

4. Prioritize Compliance and Transparency

Ensuring compliance with internal expense policies and tax regulations is critical to maintaining your company’s financial health. It also helps avoid the risk of audits or penalties for non-compliance.

Steps to Improve Compliance:

• Real-time Monitoring: Leverage digital tools that provide instant insights into employee spending. This allows managers to spot any non-compliant expenses immediately and address them before they escalate.
• Training and Education: Regularly train employees on your company’s expense policies and explain the importance of compliance. Clear communication prevents confusion and keeps everyone informed.
• Accurate Records: Maintain detailed and easily accessible records of all expenses. This will help in case of an audit and make it easier to review and verify expenses.

Promoting transparency and supporting everyone in following the same guidelines can significantly reduce the risk of policy violations and improve accountability.

5. Regularly Review and Analyze Expenses

Analyzing your company’s spending patterns allows you to identify trends, spot inefficiencies, and adjust your policies to optimize costs. Expense management solutions like Navan make this process much easier by enabling companies to generate detailed, real-time reports that break down spending by department, currency, project, or category.

Tips for Effective Expense Analysis:

• Categorize Expenses: Organize expenses into clear categories (e.g. travel, office supplies, entertainment). This helps you see where your budget is being allocated and where there might be room for savings.
• Monitor Trends: Review historical data to identify patterns. For example, is one department consistently exceeding its travel budget? Are employees spending too much on meals? Recognizing these trends can help you adjust budgets or tighten policies.
• Flag Anomalies: Look for any irregular expenses that might indicate mistakes, fraud, or non-compliance. Addressing these issues early can save you money and prevent future problems.

6. Set Clear Timelines for Reimbursements

Delayed reimbursements are a common frustration for employees. Setting clear timelines for submitting and processing expenses can streamline the reimbursement process and keep everyone happy. An automated reimbursement system can help guarantee that expenses are approved and reimbursed quickly, allowing employees to focus on their work rather than chasing payments.

Benefits of Setting Reimbursement Timelines:

• Reduced Delays: A clear timeline helps avoid unnecessary delays in processing and paying out reimbursements.
• Improved Morale: Employees who know they will be reimbursed promptly are more likely to follow expense policies and feel valued by the company.
• Efficient Processes: Automated reimbursement solutions can speed up the entire process so that employees are paid quickly while reducing the workload for finance teams.

7. Leverage Real-Time Expense Tracking

Real-time tracking is one of the most effective ways to control company spending. Expense management tools allow finance teams to track spending as it happens rather than waiting until the end of the month to reconcile expenses.

Benefits of Real-Time Tracking:

• Improved Visibility: Finance teams and managers can see who is spending money and on what in real time, securing adherence to budgets and preventing overspending.
• Accountability: With real-time data, out-of-policy spending can be addressed immediately, improving compliance and accountability.
• Better Decision-Making: Having instant access to expense data allows finance teams to make more informed decisions about budgets and resource allocation.

The Bottom Line

Optimizing your company’s expense management process is crucial for reducing costs, improving compliance, and boosting operational efficiency. 

By automating workflows, setting clear policies, using corporate cards, and embracing real-time tracking, you can streamline the way your company handles expenses and gain greater control over financial processes.

Partnering with an expense management company like Navan can provide the tools and expertise needed to take your expense management to the next level. Whether you’re looking to simplify reporting, improve compliance, or reduce errors, the right expense management solution can transform your organization’s approach to managing expenses.

Ready to optimize expense management at your company? Get started with Navan’s all-in-one solution to start benefitting from a no-hassle expense management process.x