Costly Mistakes in Manual Expense Management
Filling out expense reports has always been the bane of business travel. Employees have to keep track of dozens of tiny receipts in a variety of languages. If they have to input the information manually, the result is often simply inaccurate.
Even worse, double checking the reports is almost impossible. Many receipts were hard to read when they were issued but are nearly impossible a month later. And if any of the receipts, which come in all shapes and sizes, goes missing at any point, it becomes virtually impossible to trace it back to the source and get a reliable report on spending.
The result is that companies have a false picture of how to allocate funds for travel expenses. That could lead to bad budget decisions that could have serious ramifications. Some useful trips may be deemed too expensive when they are actually not.
Here are some of the most common mistakes people make in manual reporting:
1. Failing to separate refundable expenses from non-refundable spending.
Every company has a different policy on what the company will cover when it sends an employee abroad. It’s reasonable to expect that accommodations will be covered. But does that include room service or pay-per-view movies at the hotel? In many cases, those types of expenses are simply entered as “hotel bill” and come under a single receipt.
But even when bills do not include additional items that may not be refundable, there could be reporting issues. Sometimes receipts for personal expenses can be included, or even expenses such gas station stops for rental cars paid for by the company. Who is responsible for those costs if the car was used for personal matters as well as business?
With manual reporting, those distinctions can be blurred.
2. Using too many different vendors or service providers
In business, relationships make a huge difference. The more you work with a particular car rental company or travel agent, the more personalized service you get. And the better you know the people behind those offices, the harder they will work to give you best deals possible.
But with manual reporting, it becomes hard for the company to know which service providers each worker is using. This makes it harder for the company to claim a certain level of business with any of them. It’s also hard for the company to know if the workers are taking advantage of preferred service negotiated by the company. A company may invest in a volume deal on a certain service but has no way to know if the workers are taking advantage of the arrangement.
3. No instant results
Manual reporting, even if it’s carried out diligently and efficiently, is still extremely slow compared to automated systems, which not only capture all of the information in real time, but also share them with all of the important decision makers on budgeting questions.
Having accurate, timely, and well organized expense reports simplifies the operation for everyone involved and leads to better decisions. Everyone is on the same page for the entire process. The worker gets reimbursed properly and efficiently. The logistics team knows what the budget allocation needs to be and can find ways to reduce real costs, rather than estimated costs. And the management can see how company money is being spent.
4. Not being familiar with the VAT\GST regulations from country to country
With so many different VAT\GST regimes across Europe and beyond, it is virtually impossible to get 100% accuracy in reporting. Most people will not always know that they need to save the receipts of their laundry services, for example, because some countries provide VAT\GST return on that.
The situation is even more challenging when an employee travels through several European countries on a single swing through a region. There may be a conference in Greece followed by meetings at the Italian headquarters, and a trade show in France all on the same trip. All three countries have their own VAT\GST return policies as far as expenses covered, and all three have their own deadlines for filing for the returns.
For the complete story on recovering VAT\GST in EU countries, download our eBook.