The Problem with Expense Reporting
The traditional expense report made sense at one point in time. It was a way of ensuring that expenses were authorized, appropriate, and documented. The IRS has extensive rules about expense reporting to ensure that the spending was for the sake of the business and not a form of untaxed compensation. Having employees attach photocopies of paper receipts and fill out a paper form was best way to make everyone happy.
But in the last fifty or sixty years, we’ve had enormous changes. Corporate card programs make it easy to keep all t&e spending in one place. Almost all businesses accept plastic, so there are fewer cash expenses to document. Few employees have secretaries or assistants to do the rather tedious work of preparing an expense report. Likewise, few accounting departments have secretaries or assistants to check through each paper filing to ensure that it is correct.
And, even with the paper processes and human oversight, fraud still got through. Some companies would over-correct and reject any expense that didn’t have an original paper receipt. These policies didn’t build employee loyalty, as some employees misplaced the receipts for legitimate expenses.
Reimbursement Isn’t a Solution
Another popular policy was to have employees spend their own funds, then submit receipts for reimbursement. The thought was that this would make them be responsible spenders. Of course, this didn’t stop people from losing receipts.
The reimbursement system causes huge problems for employees who couldn’t afford to front the costs of a business trip or a client outing. They can’t afford to rent a car, so they are late for events. They take a client out for coffee when lunch or dinner would be more appropriate for the situation. This affects the business.
Reimbursement processes create budget problems, too. Some employees put off doing expense reports, then submit a stack of reimbursement requests covering months of travel. The department head had thought that things were ahead of budget, but the expense reports changed that! Some companies responded by setting reporting deadlines if employees wanted to be reimbursed. Employees who missed the deadline for whatever reason weren’t thrilled.
Expense Reporting versus Expense Management
Expense reporting is one way to manage expenses, but it’s hardly the only one. As cash becomes less and less popular, corporate credit, debit, and charge cards can create almost all the records needed for internal budget management and accounting entries. The IRS still wants to see receipts, but they can be captured with a smartphone camera.
So why do companies still require expense reports?
The main reason that companies still require expense reports is that corporate executives believe that the process is a way to manage expenses. If employees have to spend their own money, they will be more careful with it. If someone physically checks to make sure receipts match the line items, then there won’t be fraud.
We think a better form of management is having a conversation about what a reasonable budget for a trip should be, setting controls to limit the spending, and then capturing a record of that spending (with receipts) in a way that is useful for both internal financial management and external reporting.
And that’s what we have here at Bento for Business. Everyone has a Visa debit card for all employee spending, and employees don’t need to turn in expense reports. Card controls force us to stick to budgets, and we have to take pictures of receipts. We don’t have to submit photocopies of paper receipts and be second-guessed about our hotel and restaurant choices, as long as they were within the budget.
Cost Savings are Way Better than Points
Bento for Business offers flexible, easy to use controls that make it easier to manage corporate spending. Managers can set employee limits, then free employees to make decisions within those. No more arguing with accounts payable that it was okay to spend $30 on lunch because you skipped breakfast! As Bento cards can be used as fuel cards and procurement cards, businesses can keep all spending in one place.
Our customers can see how much money they save by using Bento for Business. We have saved our customers millions of dollars, exceeding the value of any points offered by other card providers. We also save time, and that’s in short supply.