Employee expense reporting has been transformed by cloud computing. What was once an erratic, cumbersome, and unpleasant experience has become a streamlined and dependable process. Though still unloved, software solutions have prioritized user experience, creating systems with tight back-end integration and highly accessible UI.
Now the flight from the office precipitated by the pandemic is about to change employee expense reporting again. People are trickling back to the office, but the “old normal” may not return with them. As companies begin planning for a post-pandemic business landscape, here are three top expense reporting trends and how they will impact accounting moving forward.
#1 Less Travel | More Home Expenses
Many organizations have well-established travel policies that require employees to fly coach, sleep cheaply, and avoid lavish restaurant dinners. However, today’s expense reporting is no longer so travel-centric.
For starters, many companies brought business travel to a stand-still, canceling conference events, sales meetings, and on-site visits. What’s more, this short-term reaction could become a long-term trend. A U.S. Census Bureau survey of small businesses in March found that only 27% of companies expected to spend money on travel in the next six months.
Meanwhile, newly remote workers came with new spending requirements that complicate expense tracking and reporting. Nearly one-third of remote workers had to purchase equipment to furnish their home officers, and, as a survey on organizational remote work readiness found, “While employers expect to have significantly more remote workers in the future compared with last year, many have yet to develop policies to accommodate those working from home.”
These interrelated trends have strained companies expense management policies, leaving leaders to make one-off, ad hoc decisions about spending and reimbursement. This solution is not sustainable or scalable.
In response, companies planning to rely on remote or hybrid teams need a home expense policy to support their accounting efforts. In general, companies should follow four principles when determining their home expense policy:
- Clarity. Work with accountants to determine the details, differentiating between reimbursements, supplemental compensation, and other requisite details.
- Consistency. Strive to create a plan that can be consistently applied to all employees.
- Simplicity. Rather than navigating the idiosyncrasies of reimbursement priorities, provide employees with a fixed one-time or a recurring subsidy that they can spend on home expenses.
- Adaptability. As businesses return to the office, the nature of remote work will change, and your policy needs the flexibility to follow suit.
The recent pandemic ushered in a new era of expense reporting requirements, and companies should take the initiative to put a plan in place that addresses today’s challenges and tomorrow’s realities.
#2 New Stakeholders Complicate Approvals
Shifting expense reporting requirements brought more people into the fold, which inevitably complicates the process. For example, accommodating home expenses requires input from IT and HR supervisors, creating friction that slows results. Since expense reports have implications for payroll, billing, project oversight, workforce development, financial management, and strategy implementation, businesses are highly incentivized to get this process right. Therefore, invest in the approval process, turning to automation that streamlines the task while improving overall efficacy.
This is especially critical when expanding the approval chain. When multiple parties are responsible for the same task, companies risk slowing the process as the “Bystander Effect” decreases the likelihood that an individual will ensure that critical tasks are completed. Strive to eliminate redundant responsibilities or overlapping activity. In addition, set approval process standards that streamline the process, including:
- establishing specific expectations for each reviewer,
- setting specific time windows for expense report review,
- assigning direct responsibilities,
- developing a feedback loop to increase efficiency over time, and
- turning to automation as much as possible.
When it comes to expense report review and approvals, more is less. This essential task becomes more complicated and convoluted as more people and processes become involved. Simplify and streamline the process to maximize effectiveness.
#3 Integrate Time Tracking
As businesses return to the office, many are turning to a hybrid model, allowing workers to benefit from the on-site and remote work experience. This makes expense tracking and reporting more challenging as businesses risk paying workers to be on-site while subsidizing home expenses.
Integrating time tracking with expense reimbursement allows accountants to more easily manage reimbursements. Even more, when these systems are combined, they simplify usability and create a single view of attendance, activities, and expenses while adjusting to shifting workplace norms. They also accommodate process integrations like time and expense that provide operational insight and support internal controls.
All the implications for businesses of the pandemic have yet to unwind. Still, it is already clear that the workplace disruptions will present new challenges to those business processes like expense reporting that are employee-facing. This is an opportunity to reimagine how organizations relate to their employees—from filing reports to managing teams—that not only increase efficiency but allow for a more humane work-life balance.
This column doesn’t necessarily reflect the opinion of The Bureau of National Affairs Inc. or its owners.
Alan Tyson serves as the CEO of DATABASICS, a best-in-class time and expense management solutions provider recognized by leading global organizations for its deep expertise, next-gen technology, and customer-focused platform. Connect with Alan on LinkedIn or follow on Twitter @DATABASICSinc.
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