Expense Management

It’s Time for Expense Reports to Go Extinct

Expense reports are costing your businesses much more than you realize, while becoming obsolete thanks to technology. Here's why they need to go the way of the dinosaurs that they are...

We hate expense reports. We're not talking about a mild irritation or a slight sigh when filing one. We hate expense reports with the burning fire of a thousand suns. 

They're annoying and time-consuming to fill out. You have to track every single dime—and if you mess up, you have to worry about the company thinking you're trying to commit fraud or rejecting reimbursement. 

And we know we're not alone. It's one of the reasons we created ClearSpend. 

Here's the thing—expenses reports aren't just annoying. They also cost your business time, money, and a lot more. 

What's the true cost of expense reports?

The cost of expense reports goes beyond the amount of money and time it takes your team to file them. In fact, the true cost of expense reports is much higher than you think.  

Here's why expense reports need to go extinct—just like typewriters, fax machines, and old 70s computers the size of a refrigerator. 

Traditional expense reports create financial anxiety for employees 

In traditional expense management, your employees pay for expenses out of their own pocket and then submit receipts for reimbursement. That means your company is essentially taking an interest-free loan from your employees, which is…not cool. 

Think about the employee who travels for a week. They spend at least $100 a night on a hotel, $50 a day on food, and another $300 to $700 on airline tickets. Those costs quickly add up to $1,000 or more. 

If the process takes too long or if errors prevent the report from being processed in time, they may have to cover the cost for a few weeks or risk being charged interest on a credit card.  

That isn't fair for your employees, and it can distract them from getting work done.

Expense reports take an average of 20 minutes to process 

Even the best expense management software takes time to use. Twenty minutes might not sound very long—but that is 20 minutes multiplied by the number of expense reports your company processes in a month. 

In addition to the cost of the employee's salary for that 20 minutes, there's also an opportunity cost. 

How many extra sales could your sales team close in a year if they didn't have to do expense reports? How many extra customers could your customer service team help? How much faster could you get that coding problem fixed if your developers didn't waste 20 minutes every time they had to file an expense report? 

What growth opportunities is your business missing out on—all because of an outdated expense report process? 

The average expense report costs $58 to process 

Expense reports are expensive. 

According to a study by GBTA, the average company spends $58 to process just one expense report. Multiply that by the number of employees you have, the number of times they travel or file a report—and you could be spending thousands of dollars a month just to process expense reports. 

Inaccurate expense reports cost you even more 

You've already spent an average of $58 dollars to process that expense report. 

At least it's done, right? Not quite. According to the same GBTA study, an average of 19% of expense reports have an error. That error takes about twenty minutes to fix and costs you another $52. 

Let's do a little back of the napkin math. Say you process 100 expense reports a month. That's already $5,200. THEN, 20% of those need to be fixed and reprocessed (I'm using round numbers here for ease of math, don't judge me).

Figure illustrating how much it costs to process 100 expense reports. Total cost $6,240.t

Those expense reports that you just thought were annoying? They could be costing you over $6,000 a month—or more. 

And if you don't catch those inaccuracies, well that’s going to cost you even more. 

The cost of expense fraud  

A recent study found that expense fraud costs the average companies $40,000 a year — and takes up to two years to catch. 😱  Luckily all that doesn't come out of just one pocket, but it's safe to say that expense fraud can cost your business a lot of cash.  

Here's the thing, no matter how careful you are, expense reports don't prevent fraud. That's because some of the most common types of expense fraud—like making purchases and then returning them or adding extra to the tip at a restaurant—won't get caught by your standard expense report process. 

Expense reports damage company culture 

Expense reports cost your business time and money, but there are non-monetary costs like the impact to your company culture. 

Adding unnecessary steps to the process is annoying and feels like micromanagement to your employees. They think you don't trust them or value their time, and that's not good for anyone. 

Even worse, in the UK a study found that one in four employees report they have canceled a meeting just to avoid the expense payout process. That means less time meeting with clients and building team rapport—all because expense reports are annoying. The hidden costs of expense reports include damage to your company culture and lost opportunities, which could impact business growth. 

The real question is…why are we still using expense reports? 

What’s the alternative? Say goodbye to expense reports with ClearSpend 

Expense reports might be a pain, but they're necessary, right? Nope, they're not.

What if I told you it was possible to totally get rid of annoying expense reports without costing your company any money and keeping your bookkeeper, CFO, or controller happy? 

You can, with ClearSpend. 

Our automated spend control and expense management platform makes it easy (and dare I say, fun) to manage employee expenses and get rid of those annoying expense reports. 

In the ClearSpend dashboard, you can easily track and approve purchases, reconcile receipts, and categorize expenses (without ever touching a smelly receipt or making people begrudgingly fill out an expense report). 

Plus, our control spend features help you nip unauthorized spending in the bud. Using our virtual business cards, you can set hyper specific limits and restrictions. Want to give Carol a card to fill up the company car at the pump? You can do that. Need to change the limit on John's company card after he comes back from an overseas trip? All it takes is a few clicks. 

It's kinda like having a little expense fairy taking care of all the boring parts of expense management so you can focus on what really matters—taking care of your team and growing your business.

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