An organization's expense approval process18 should be rapid, automated, streamlined, and straightforward. When managers, team leaders, or the finance team do not approve expenses in a timely manner, it tends to delay the work of multiple teams, so any chaotic behaviour in expense workflow can have a significant impact on your business process.
A delay in the approval process could subsequently result in disorganisation among teams and a lack of funds to purchase resources, which would eventually reflect negatively on your customer service and your ability to respond promptly to vendors.
Some Common Expense Management Issues
Wrong Budget Management
When it comes to approving expenses, the term automation is frequently used, but no manager can simply approve every request that comes to his or her desk. They must examine the monthly and annual budgets, the Opex (operational expenditure) reports, and a number of Excel spreadsheets to ensure accuracy. A mistake could cause havoc if the wrong items are approved and the essential ones are left with no money to purchase them. This brings us to the subsequent stage! A manager cannot approve an expense because there is sufficient cash on hand or budgetary space. Before making extravagant purchases, there are numerous factors to consider, such as long-term money management, unexpected future expenses, and operating costs. The only things that can be approved immediately are those that are absolutely necessary, while everything else should be prioritised. Incorrect budget management could have unavoidable negative effects on the financial situation of an organisation.
Improper Allocation of Authorized Expenses
A proposal and budget that have been approved must be adhered to until the purchase is made. In the event that approval is granted for five computers, the necessary components must be acquired without exceeding the budget. They are also expected to be delivered promptly to those who require them. Any delay in its delivery could result in a loss of production, inefficient use of available resources, and an impatient workforce if they do not receive the required software, hardware, or other support. Productivity will also be affected by a lengthy reimbursement process.
There are too many pending approvals.
Depending on the size of the finance team and the nature of the organization's services, there may be an approval backlog that is extremely difficult to manage. If they are required to manually verify Excel sheets and other documents each time, the process becomes tedious for everyone involved, particularly the finance team and managers responsible for approving it. The more the workload is, the higher the chances of errors. They may not be able to approve or reject all requests in order to complete the work on time, as each document requires personalised attention in addition to a keen understanding of its urgency.