It’s that time of month again where you need to sort your expenses out. It’s a bit of a pain having to put the data in, but you’ve got an excel business travel expense template so it’s not too bad. You just have to go through and dig for all your receipts, manually put in the data and hope you’ve not forgotten anything. There are loads of free download excel templates you can use, and it works just fine, so why would you change? It’s certainly cheaper than using an automated expense management system.
But what if you’re wrong? It turns out you’re actually spending more doing it this way, and it’s all in the time it takes to input this data.
Manual data processing
Say you hire someone to do your accounting, 20 hours a week at £12 per hour. They have to manually enter, check and produce reports on employee expenses. If they are working 50 weeks a year, that’s £12,000 you’re paying for your expenses to be input. Think of where else 12k could be invested in your company. You’re losing revenue on sales through missed marketing opportunities.
Receipt storage hassle and lost invoices
And not only that, but manual data input using something like a free download income and expense spreadsheet creates mistakes. What if someone is late in sending over their receipts and invoices? What if they’ve lost a receipt? You can’t reclaim Tax on lost receipts, so you’re losing money in other areas too.
Poor visibility of spend and lack of expenditure control
Using a simple travel sheet format leads to a lack of visibility of your overall spending. It takes extra time to visualise this data and analyse spending. It may seem like an extra add on to use a service which supplies this analysis, but an automated expense management system like Capture Expense integrates it automatically in the software so that you can easily view your expenses and understand what they mean. This means better control of expenditure as well.
Overestimated mileage
Working out fuel expenses using a template is a pretty rudimentary way of calculating mileage and VAT on fuel rates. Mileage Allowance Payments (MAPs) are what you pay your employee for using their own vehicle for business journeys.
You’re allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC, this is called an ‘approved amount’. If you reimburse employees above the approved amount, the benefit-in-kind will need to be reported to HMRC to deduct any further tax due.
Capture Expense stores the approved rates and you can generate a reports which shows how much you’ve paid to staff above or below the approved rates. This determines by simply multiplying the employee’s travel miles for the year by the rate per mile for the vehicle. The total includes any type of vehicle they’ve used. The rates below were correct in 2020.
Anything below the ‘approved amount’ then you won’t have to report to HMRC or pay tax, but your employee will be able to get tax relief (called Mileage Allowance Relief, or MAR) on the unused balance of the approved amount. You can make separate optional reports to HMRC of any such unused balances under a scheme called the Mileage Allowance Relief Optional Reporting Scheme (MARORS).
Chasing staff to submit claims and backlogged reimbursement
I’m sure we’ve all been on at least one side of this problem. It can take an age to get your reports approved and reimbursed because it’s such a time intensive operation. Want to speed up expense reimbursement? Use an automated system! Because it is so much easier to input data as most of it is done automatically using receipts and OCR, it means you can submit more accurate reports more quickly. This is easier to check and approve, meaning you get your money back in a timely manner. On the flipside, if you’re in charge or approving expenses it can be a real burden to chase claims. It takes time and effort to check up on people, send emails, check data, so switching to an automated system largely eliminates this problem by allowing a much more consistent and accurate flow of claim data which you can approve at a better rate.
Out-of-policy bottlenecks
Sometimes it’s easy to forget what policy is, and what applies to you. With an expense excel sheet you can’t dynamically show policy and make sure all claims are according to policy. With a smart system custom policies can be easily displayed to stop the problem before it’s even submitted.
Duplication and errors
File management is also a real struggle when you have very similar sheets sent from multiple people at different times. Is this the most up to date version? Have I already been sent this? It’s a tedious process of checking that can often lead to errors. Eliminate this entire problem with a smart dynamic system such as Capture Expense.
To summarise, just a few of the drawbacks to manual expense management using excel template are:
- Receipt storage hassle
- Lost receipts ( so no Tax reclaim)
- Poor visibility of spend
- Tax inaccuracies
- Lack of audit trail
- Out-of-policy bottle necks
- Lack of expenditure control
- Overestimated mileage
- Manual data processing
- Backlogged reimbursement
- Duplication and errors
- Chasing staff to submit claims
- Reiterating policy to employees
- Accrual unaccounted expenses
- Difficultly with Remote Workers
- Staff personalise expense forms
And just some benefits to automated expense management:
- Digital Receipts
- Combined Mileage, Cash and Card
- Smart Approval workflow
- HMRC Fuel Rates (Private, Business)
- Personal Milage Refund
- VAT Reclaim & Management
- Built-in Compliance
- Easy to use and maintain
- Available 24/7 on any device
- Only pay what you use
- Minimal training and setup
If you’ve got any questions or want to know more, drop us a message. You can also book a free demo to see what we can do for you and your company.