How to Automate Expense Reports and Expense Approval Process

Manually managing expense reports and approvals is a time-consuming and error-prone process for both employees and finance teams. From collecting receipts to chasing approvals, the inefficiencies pile up, causing delays in reimbursements. For accountants, manually verifying expenses, enforcing policies, and logging data into accounting systems add an unnecessary burden, especially when outdated methods like paper forms or spreadsheets are involved.

Expense management automation provides a solution for many challenges faced by finance teams and employees. In this blog, we’ll explore the challenges of manual expense reporting, the advantages of automation, and how you can implement an efficient, technology-driven expense management process tailored to your business needs.

The Problem with Paper-Based Expense Reports 

Paper-based expense reporting can be frustrating for both employees and finance teams, after all, they require a lot of manual input. Employees have to collect and keep physical receipts, manually fill out forms, and submit them to their managers for approvals. This process can be extremely time-consuming, especially for frequent travelers.

For accountants, the manual workload is even heavier. Every report must be verified, cross-checked with policies, and logged into the accounting system – tasks highly prone to human error. Additionally, there’s the challenge of identifying duplicate or fraudulent expense claims.

Despite all this effort, paper-based systems do not provide real-time visibility into spending. Finance teams often work with outdated or incomplete data, which makes it challenging to track budgets and identify instances of overspending. This issue becomes even more apparent for companies that manage multi-entity accounting.

Why are expense reports still important? 

Despite the challenges, expense reports remain essential for businesses to maintain financial accuracy and accountability. They ensure that every employee reimbursement is recorded properly and that spending aligns with company policies. Expense reports also provide critical data for tracking budgets, forecasting future expenses, and meeting compliance requirements.

The solution isn’t to eliminate expense reports altogether but to change how they are managed. 

What is Expense Management Automation?

Expense management automation uses technology like AI and machine learning to simplify how businesses track, process, and approve expense reports. By automating tasks like receipt capture, expense categorization, and report generation, this solution minimizes the need for manual input, reducing errors and saving valuable time for your accountants and employees.

Automated expense management systems transform a traditionally tedious process into a simplified workflow. Finance teams can eliminate repetitive data entry, avoid inaccuracies, and gain real-time insights into spending patterns. For CFOs, accountants, and employees, this means less hassle and a more efficient, accurate, and transparent way to manage company expenses.

Benefits of Expense Management Automation

The shift from manual to automated expense reports and approvals offers numerous advantages for your company. Here are some of the most notable benefits of automated expense management:

Time Savings

Manual data entry for expense reports can take hours, especially when processing multiple receipts across departments. Tools equipped with Optical Character Recognition (OCR) instantly extract information from receipts, such as dates, amounts, and merchant names, and categorize them automatically. In the end, process automation can save more than 20,000 man-hours and hundreds of thousands of dollars in operating expenses each year.

Reduced Errors and Fraud Prevention

Manual processes are prone to errors, such as duplicate entries or incorrect categorization. Statistically, an average employee makes 118 mistakes per year. Automated systems can flag duplicate expenses, validate expense claims against company policies, and identify anomalies, like suspiciously high amounts or out-of-policy purchases. For instance, if an employee submits the same receipt twice, the system will detect and flag it, preventing accidental overpayments or intentional employee fraud.

Faster Approvals

Chasing approvers and waiting for physical signatures can slow down your reimbursement process. Automation tools route expense reports to the right approvers based on predefined business rules. With automated reminders and real-time tracking, accountants no longer need to follow up on the approvals manually, ensuring faster reimbursements.

Strict Policy Compliance

With manual reports, ensuring that employees follow expense policies can be challenging. Automated systems enforce policy compliance by flagging out-of-policy expenses as soon as they are submitted. If an employee attempts to submit a personal expense or exceeds the daily travel allowance, the system will reject the claim or require additional justification before submission.

Improved Visibility and Reporting

Keeping track of spending trends and analyzing expenses by hand can be tedious and is often prone to mistakes. It is reported that analysts spend up to 40% of their time fixing data before it can be used for strategic decision-making. Automation tools generate real-time reports, providing a clear view of spending patterns, budget utilization, and departmental expenses.

Integration with Accounting Systems

Most expense management solutions integrate with accounting or ERP systems, eliminating the need for manual data transfers. Approved expense reports are automatically synced to accounts payable, ensuring accurate bookkeeping and reducing reconciliation errors. 

How to Automate Expense Reports and Approvals

Automating expense reports and approvals requires the right instruments, well-defined processes, and thoughtful implementation. Here’s how to automate your expense management effectively:

1. Choose the Right Expense Management Software

Select software designed for your company’s specific needs. For small businesses, prioritize user-friendliness and integration with basic accounting tools like QuickBooks. With most expense management apps, you can evaluate the ease of use of the app by applying for a free demonstration.

For larger organizations, look for platforms that support multi-level approval workflows, advanced policy setups and real-time analytics.

In both scenarios, ensure the software offers basic features like:

• OCR for receipt scanning to eliminate manual data entry
• Approval workflows for fast reimbursements
• Mobile compatibility for on-the-go submissions
• Integration options for syncing with your payroll, accounting, or ERP systems

Evaluate solutions that offer trial periods to test usability and ensure they fit your team’s workflow.

2. Automate Receipt Capture with OCR

OCR is crucial for automatically extracting data from receipts. Select a system capable of handling:

• Multi-language and currency recognition for international teams or business trip expenses
• Various formats like PDFs, email receipts and photos
• Categorization based on predefined expense policies (e.g., “Travel” or “Meals”)

3. Set Up Expense Policies

Set up company expense policies within the platform. Define:

• Spending limits for categories like travel, housing, and meals
• Approval thresholds based on expense amounts or roles (e.g., manager sign-off for claims above $1,000)
• Automated enforcement flags out-of-policy expenses, requiring justification before submission

4. Design Approval Workflows

Approval workflows ensure reports are routed correctly without manual follow-ups. Use the software to map workflows based on:

• Expense types (e.g., travel vs. entertainment)
• Department hierarchies to route claims to managers or finance heads
• Number of approvers per expense category 
• Conditional triggers (e.g., CFO sign-off for claims over a specific threshold)
• Set up automated notifications to alert approvers

5. Integrate with Your Accounting and Payroll Systems

Integrate your expense platform with your existing systems to synchronize all financial data. Look for compatibility with:

• With your accounting or ERP tools, or software that allows custom connections through an API  
• Payroll systems to automate reimbursement schedules

Integration eliminates duplicate entries and ensures approved expenses are recorded in real time, reducing reconciliation errors.

7. Leverage Analytics and Reporting

Use built-in analytics to monitor expense trends, compliance, and overall spending. Dashboards should provide:

• Real-time spending insights by department or category
• Policy violations and flagged expenses for easy review
• Budget utilization reports to identify cost-saving opportunities

In an ideal scenario, your expense management platform should integrate all essential features for processing and managing expenses while also allowing for customization to address your specific business needs.

In conclusion, seek a solution that not only automates invoice approvals and reporting but also enables you to manage all your business spendings – including invoices and card transactions – in a single, centralized platform.

Automate Your Expense Management with Klippa

Forget about the tedious process of expense reporting and approvals. Trust Klippa SpendControl to automate all your expense management tasks and speed up your hour-long processes into several clicks!

Klippa SpendControl is an all-in-one digital pre-accounting software that combines expense management, invoice processing and business credit card modules. 

Our software utilizes OCR technology for automatic receipt recognition to ensure accurate data capture and enable receipt scanning, invoice approval, archiving, and booking directly to your financial administration.

With Klippa SpendControl you can:

• Manage your employee expenses, vendor invoices and business credit cards in one platform
• Scan, submit, process, and approve expenses via web or mobile app
• Submit bundles of expense reports for faster reimbursements of business trips or projects
• Achieve 99% receipt data extraction accuracy with Klippa’s OCR
• Regain control over your finances with intuitive dashboards
• Customize your approval management with multi-level authorization flows 
• Automatically reconcile credit card transactions
• Never fail to comply with tax and data privacy regulations with our ISO27001-certified and GDPR-compliant solution
• Rely on automatic multi-currency support for international payments
• Prevent expense fraud with built-in duplicate and fraud detection
• Integrate SpendControl with your accounting and ERP software, like Quickbooks, NetSuite, or SAP

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