To understand expense reimbursement, take the amount repaid to a staff who paid an out-of-pocket expense to complete their assigned job. Travel-related costs should be reimbursed as business expenses. However, they are not always. Both of these charges have the potential for reimbursement, whether an employee uses their travel credit card to book airfare or an office manager uses their account to pay for the printing of board presentations. For expense reimbursement, there are numerous categories.
For a very long time, travel and expenses accumulated either while traveling or entertaining clients accounted for the more significant part of employee spending. Today, though, teams are paying for costs that don’t always neatly fall under one T&E category. Modern employees now routinely spend money on digital ads, SaaS subscriptions for software tools, and home office supplies. The future holds more diverse spending kinds and a surge in remote, electronic payments, making expense reimbursement an absolute top priority for financial services instead of a time-consuming legacy task.
Some recurring problems that many businesses face using the old finance systems are:
- Most employees do things with the right intentions. But they sometimes make mistakes because they are unaware of the policies. The older traditional finance system does not have a clear policy awareness.
- Frauds related to expense reimbursement have increased to a great extent in recent times. A survey noted that expense reimbursement is the most common fraud in developed countries. Traditional finance systems do not offer a clear description of expense reimbursement.
- Employees have always been expected to shoulder the majority of their costs. More than 50% of workers and travel managers claim that employees must use a personal credit card to cover expenses.
Innovative fintech systems can improve the working environment for managers and employees. Additionally, it can allow financial teams to set boundaries, manage to spend, and accurately access data to automate reconciliation, reduce fraud, and make educated decisions.
Employees can also keep track of spending with the use of technology. Smartphone apps allow you to submit receipt images and instantly enter expense reimbursement data for your financial department. The company’s finance department won’t initially approve an expense reimbursement if it cannot be verified. Therefore, it’s critical that all required documentation, including receipts, be provided. It enables the company’s finance department to immediately verify and authorize the expense reimbursement.
Virtual cards are one remedy since they provide a degree of certainty and security previously unattainable. In addition to removing manual systems and highly secure payments, this includes insurance and limit restrictions at the card level, data gathered at the time of the transaction, automated reconciliation, data feeds into business systems, and enhanced efficiencies.
However, any modern corporate payment scheme should include physical and virtual cards; fortunately, new business cards make them more widely available. And owing to technology, both natural and virtual cards may be used in apps, mobile wallets, and actual transactions.