Expense Reimbursements Are Hurting Your Employees and Your Business

Expense Reimbursements Are Hurting Your Employees and Your Business-59

According to the Association of Certified Fraud Examiners, expense reimbursements  are responsible for 21% of fraud at small businesses and 11% at large businesses. But that’s not the least of the worries a company faces when reimbursing employees for travel and expenses (T&E). Approving expense reports is a manual and tedious process that ties up the finance team and managers for hours. 

Add to it the inconvenience caused to employees who have to wait for weeks or months for their expense reports to get approved, and you have a good idea why the conventional expense reimbursement process is a mess.

If you are not yet convinced, read on to know all the reasons why your company needs to make a radical change in the way it reimburses employees.  

How reimbursements are a pain for the company

Policy violation

In a shocking study, it was found that nearly two-thirds of employees haven’t read their company’s spending policy. Even more worryingly, 85% of employees admit to lying on their expense reports. 

The present method of employees submitting old paper receipts or filling up spreadsheets with virtually no supervision is in no way equipped to handle the dual challenges of fraud and policy violations borne out of ignorance. This weakness of conventional reimbursement methods is prevalent because finance teams must manually process hundreds or even thousands of expense reports from different employees who may have entirely different spending policies. 

Also, since paper receipts are involved, there is no way to check them for authenticity or ensure the same receipts aren’t submitted multiple times or by different people. 

Processing costs and time

Studies indicate that an average expense claim takes about 20 minutes to process. Considering that hundreds of expense reports go through the system every year, wasting the time of everyone involved, it is sensible to assume that the process drains valuable time from the company. 

Due to all the waste of time and resources, it is estimated that an expense claim costs $58 to process, which is a hefty sum.

As per the same report, there is a worrying trend of errors in the expense claims processing stage. Notably, the same report claims that 19% of expense reports contain errors and that correcting an expense report takes about 18 mins and costs about $52. 

How reimbursements are a pain for your employees

Delays in reimbursements

Because of complications in the process and unclear rules, 48% or so of employees are still using their own money for company expenses without being reimbursed. Given how on-field employees spend a lot of money (10 to 15% of their salary) for travel and other related expenses, failure to reimburse or delays in the process can be quite demoralizing.  

When employees have to wait for long to get reimbursed, it creates an atmosphere of distrust and resentment, which only worsens if they repeatedly need to confront the management or finance department to process their reimbursements. 

Hassles in the reporting process

For the most part, employees have to carry around crumbling paper receipts or fill-out extensive spreadsheets if they want to file an expense. While filling out the form or submitting their receipts, they have no way of knowing whether their submission followed company policy. 

Consequently, when the reimbursement doesn’t come or is delayed, employees are left wondering why they had to go through all that trouble. Add to this inconvenience the wasted hours of the employee, and you have the recipe for a crisis in the form of high levels of employee dissatisfaction and turnover.  


Expense management is undoubtedly a painful process for both the company and the employee. For the company, it is wasted hours and money down the drain. For the employee, manual expense reporting represents a financial burden, lost productivity, and delays in getting their money back. 

As a result, automated expense management is the way to go. Apart from bringing much-needed efficiency to the process, it also substantially boosts visibility and improves policy compliance.

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