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How to use automation to speed expense report approval

  • February 13, 2018
  • |
  • Ethan Laub & Maggie Joy

  •  |
  • Expenses

automation speedAre you reimbursing employees for their expenses quickly, or is it taking weeks and weeks to get money back in their pockets? If the answer is “weeks and weeks” your expense report approval process may need some fine tuning.


Fast turnaround of employee expense reports is good for everyone. It improves employee satisfaction, gives the finance team fresher visibility into T&E spending, and helps ensure that corporate card bills get paid on time, thus avoiding late fees. It’s a triple win. That’s why “Expense Report Approval Cycle Time” is one of the Benchmarks we track in the 2018 Coupa Benchmark. According to data compiled from our platform, Coupa customers in the top performing quartile for this KPI were able to approve expense reports in an average of 27.9 hours.


If the time to approve expense reports is too slow at your company, and you want to improve your performance, there are three main avenues of attack: improving the quality of expense report submissions, streamlining the approval and audit process, and making sure approvers perform their part in a timely manner. Here’s how to approach  each:


1. Improving expense report quality

The first thing you can do is help employees create expense reports that are complete, compliant, and ready to approve. That reduces the time accounting has to spend hunting for missing information or following up on out of policy submissions.


This requires a two-pronged approach: Using automation to help people fill out their reports correctly, and halting submission of reports that need more work.


Make sure you’re leveraging integrations with travel booking tools or corporate cards that can pre-populate and categorize expense items. That gives people a head start and cuts down on errors.


Then, provide policy guidance that employees can see as they fill out their expense reports. At many companies, a lot of effort goes into creating a travel and expense policy, and then it sits on a shelf somewhere, or is buried on the company intranet. Surfacing the right information and feedback at the right point in the process improves expense report quality, and provides in-the moment training that over time should help make it faster easier to create quality reports.


Try to cover all the common policies most users need to know to submit a report successfully--receipt requirements; mileage reimbursement rates; per diem limits, category limits, etc.


Use submission blockers to alert employees to any errors or omissions that need to be taken care of before they can submit. These are similar to the alerts you get letting you know you missed a field when you’re filling out a web form.


One caveat—be sure to configure your policies and requirements by role or expense category, rather than showing people information that’s not relevant to them, or requiring everyone to fill out every field. Limit your requirements to those things that absolutely have to be on an expense report for it to be considered a quality report. Don’t include things that are only applicable to a small percentage of your users.


For example, we have a customer in the mortgage business. Employee roles include general administration, IT, compliance officers and loan officers. For loan officers submitting expenses in one particular category, they have to attach a valid agreement with a realtor before they can submit the report. In that case, you would tie that requirement to the category, so as not to trigger a submission blocker for all reports.


2. Streamlining approvals and audits

If you have quality expense reports coming in, but reports are still getting hung up in the approval process, that is the next thing to evaluate.


There are two major components of the approval process: Getting approvers to sign off on submitted expenses, and expense report audits by finance, which is usually the last step in the process. The optimization strategy here is to use your human approval and audit resources sparingly, letting automation do a lot of the work.


Think carefully about your approval policies. Do you really need five or six people reviewing an expense report? Most people would say no, yet this is the process that has grown up over time at many companies.


There is no hard and fast rule for how many approvers you should have. You have to consider what makes sense for your business, but also what makes sense in terms of employee responsibility.


For example, you may have managers who are making big financial decisions for your company, yet they are only allowed to approve expense reports up to $1,000. Anything above that has to go to their boss. Why drag more senior executives into the review process when the manager is capable of making a good decision on it?


Consider allowing self-approvals. If you’re already trusting employees to spend up to certain limits in other arenas, maybe it makes sense to let them submit expense reports under a certain amount directly to accounting, without manager approval.


Auditing is the last stop in the review and approval process. If you have reliable, scalable auditing processes in place as a backstop, it can make everyone more comfortable with trimming approval chains.


Without some kind of automation to score and flag high risk reports, most organizations either don’t audit anything, audit randomly, or audit everything. Clearly, auditing everything is the best way to reduce fraud and ensure compliance, but it takes a lot of human resources.


A better way is to configure your legal and policy compliance requirements into a tool that can check off the simple, basic audit items and assign a quality score to the report. Then the finance team only has to review reports that have been flagged with a low score. High quality reports that have passed through management approval can be paid without further ado.


3. Automated nudging

By improving expense report quality, streamlining your approval chain and introducing report scoring to flag reports for audit, you can free up people’s time so that they become exception handlers, only focusing on reports where their attention is really needed. Even so, you still need people to carry out their roles--and people are busy.


Managers should know more or less that an expense report is on the way, and mobile notifications and approval capability have made it easier for expense report approvers to take action anytime, anywhere, but things can drop to the bottom of the queue quickly. So, consider setting up push reminders to nudge approvers to complete their step in the process. These can be set to notify approvers when a new report is ready, and to repeat at specified intervals until the approval is completed.


Something else to consider: auto-escalation, moving the report to the next person in the approval chain if they don’t approve by a certain time. Of course, you want to remind approvers that you’re going to do so.


Used together, automated reminders and auto escalation help you scale the follow up effort and save your team time they can spend on more productive work.


Putting it all together

As with all T&E processes, getting expense reports through the approval process efficiently is an outcome of well thought out and clearly communicated policies, supported by automation. Even with such a seemingly straightforward process, there are still quite a few interrelated components that all have to work smoothly.


Breaking the expense report approval process down into its components, and evaluating your performance in each area should show you the path to a fully optimized process. Maybe you already have quality expense reports and short approval chains, and all you need are automated reminders to keep approvers on their toes. Maybe you implement audit scoring first, and set that up as a back stop before you attempt to streamline the approval chain and nudge people through it. Pick a place to start, optimize each component, and you’ll be reimbursing employees with enviable speed.


Ethan Laub is Director, Product Management. Maggie Joy is Senior Product Manager. To learn more about Expense Report Approval Cycle Times and other Coupa Benchmarks for 2018, click here.



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