Automate your business expense process

Business expenses are something companies of all sizes in all sectors need to process with care. It’s not enough to pay the right amount in good time; there are legal obligations to take into consideration. Each purchase requires a receipt and all receipts need to be archived. If an employee pays the expense out of their own pocket, they’ll need to fill out an expense report to be reimbursed. And all expense reports must be recorded in the company accounts.

Fortunately, you can find modern solutions that do much of the bureaucratic work for you. Here, we look at some good practices to help make expense management a smooth process in your business.

Managing your companies’ expenses is hardly the most glamorous task. It can be time-consuming and, let’s face it, boring. Between drafting expense reports, collecting all the paper receipts and stapling them in the right place, and transferring all that to your accountant, there is also plenty of risk of manual error somewhere along the line.

Automating the process kills two birds with one stone: it slashes the time you need to spend managing expenses and reduces the margin for human error. You can focus the time saved on more interesting, more strategic pursuits that add value to your business.

As well as being dull and a drain on your time, managing expenses isn’t free. There are supply costs to take into account: most companies continue to print out every quote, every invoice they send and receive. Then all that paper needs to be stored somewhere safe, leading to archiving costs.

As with all those bits of paper, some will inevitably get lost. If you receive a visit from the tax inspectors, you may need to provide them with proof of every purchase your company has made or risk a fine.

Automating the process reduces both the cost and the risk in several ways:

• the proofs-of-purchase are kept in digital format, which reduces printing and archiving costs;

• you can find expense reports and receipts in a few clicks, limiting the risk of losing them and incurring penalties in the case of an inspection;

• you get clearer visibility of your employees’ expenses and will find it easier to stick to budgets.

Managing expenses correctly means ensuring all expense reports are 100% compliant with the legal obligation to include the rate and amount of VAT, the total amount (both excluding and including tax) the date of the expense and the nature of the expense.

Companies are prone to making mistakes when entering all this data manually, especially when they have many expense reports to process. These involuntary errors have an impact on the companies’ accounting, which may leave them exposed to financial penalties if inspected by the tax authorities.

Automating an expense process makes it more reliable. Modern solutions will, for example, detect all important data like VAT automatically.

Let’s remind ourselves of the rules governing expenses to understand the importance of automation. When an employee makes a business purchase with their own personal card, they must make an expense report in order to be reimbursed. And each expense report must be accompanied by a proof of purchase.

Each business expense must be justified. To be compliant, your receipts must include specific information, such as the price before and after tax and the VAT rate. A simple payment card ticket will generally not be accepted as compliant as it does not include all the requisite information.

Thanks to dematerialized receipts, employees no longer need to carry around the paper versions of receipts in their wallets and then staple them to the corresponding expense report. Instead, they can simply take a photo of the receipt using their smartphone and then upload the digital file to a dedicated app. These digitized receipts carry same legal weight - known as “probative value” - as the paper version and are fully legally compliant.

These digitized receipts make life easier for all concerned:

• accountants don’t spend their time chasing down missing paper receipts;

• companies have all their receipts stocked safely in one place, easily accessible and ready for the tax authorities to inspect;

• employees who pay up front for an expense can be reimbursed faster.

Employees sometimes need to pay business expenses with their own bank cards. This solution is not ideal as it means they must pay upfront and then wait until the end of the month to be reimbursed, which could impact their own personal cash flow. To avoid this, you could give them a more adapted payment method, such as a company payment card. Some businesses are reluctant to hand out cards to their employees, fearing a loss of control over their company-wide expenses. This concern is perfectly understandable, although modern solutions do allow companies to give their employees more autonomy without having to worry about running over budget.

The company card (or cards) is/are directly associated to the company account. It allows employees to pay for those expenses that are for strictly business purposes.

If this system has proven problematic in the past, today the situation has improved markedly.

Nowadays, some online business accounts offer cards that are entirely customizable. Account admins are able to set payment limits for each card, limit their usage to certain days or time periods or restrict payments made online or abroad. This way they maintain total visibility over what their teams spend. And the employees don’t have to pay upfront and wait to be reimbursed.

Temporary cards, or “burner” cards are a useful addition to a company’s finance armory.

Designed for occasional, one-off expenses, they can only be used for a limited time that’s defined in advance. Once the intended one-off purchase has been made, the card expires automatically.

These limited-life-span cards are great for employees who only rarely make business purchases and who therefore don’t need a payment card on a daily basis.

You’ve now got what you need to automate your expense process. With Qonto, you can start putting in place the best expense practice today.