Expense Management Metrics: Cost Per Expense Report
Today’s travel and expense reporting and management software market offers affordable, scalable solutions for organizations across industries. Savvy expense and travel managers have utilized them to cut costs and improve visibility into employee spend, an area that has traditionally been a difficult beast to control. As the market matures and these organizations continue to make inroads to expense reporting efficiency, we wanted to explore an important metric to use when tracking progress: the cost to process a single expense report.
Similar to other back-office process metrics, like cost per invoice and cost per purchase order, there are a lot of factors that go into calculating cost per expense report. But it is nearly always time well spent since it demonstrates the staggering cost of paper processes (see table below). When building a business case for expense reporting automation or measuring ROI of an existing expense report management solution, there is simply no better tool to have in your arsenal.
When calculating cost per expense report, you’ll first need to map out the entire journey of an expense report from beginning to end. Find out how long it typically takes employees to submit receipts and fill out spreadsheets or email requests, as well as how long it takes managers to review and approve. Find out how many expense reports are processed each month by how many employees, and with salary and overhead data you can deduce a base cost. Then it’s important to consider how many errors there typically are per month, and factor in the average monthly time involved in correcting and resubmitting. Also don’t forget to factor in the any ‘hidden’ or additional costs associated with data entry and file storage, as well bank or software fees. Once you have an estimate for your organization, you can compare with our benchmark data above to find out how you compare.
Going through the calculation process will not only provide you with a compelling data point to present to management as you advocate for process improvement, it helps bolster your business case in less obvious ways. Speaking to your colleagues about their expense reporting routines and headaches is the perfect basis on which to build support for transformation. If you document each step in the expense reporting process, it’s easy to see where simple tweaks could have a big impact. It may be that some of the expense reporting pains can be avoided with people and process (non-technology) changes. If your process is audited and cleaned up prior to implementing automation, you’ll be able to utilize the technology to the fullest extent possible.
Once you’ve completed a cost per expense report evaluation and calculation, you’ll also be in a better position to start taking software demos and scoring providers. Our Travel and Expense Management Navigator scores solutions in eleven different categories on a scale of one to ten, which provides a good starting point for this phase in your journey to transformation.
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