Measuring the ROI of Expense Management Software
Expense tracking software typically calculates fees according to the number of users actively using it; these users are described in the field as people who submit at one expense report each month.
When evaluating the return of using expense management software in business settings various essential factors are considered:
- The typical amount of time that workers dedicate to preparing an expense report.
- The typical pay per hour for workers
- On average finance team spends to process an expense report.
- Average hourly wage of finance team members
- The inaccuracies found in reports.
According to the findings from Oxford Economics and the U.S Travel Association businesses can expect a $9.50 revenue and $ 290 profit for every dollar spent on business travel. Specifically targeting clients or potential customers during travel can result in a gain of $15 to $19.99 for each dollar invested. These statistics emphasize the significance of optimizing travel costs to enhance your ROI.
When assessing the return on investment (ROI) of an Expense Management Software system’s effectiveness and impact on costs and efficiency levels. We analyze metrics based on research findings from a study conducted by the Global Business Travel Association (GBTA):
- On average it takes 20 minutes to finish filling out an expense report.
- The typical cost for processing each expense report is around $58.
- 20 percent of expense reports contain errors.
- It typically takes around 20 minutes to rectify a report.
- It costs $52 to rectify an expense report.
Imagine handling 100 expense reports every month with a tracking system that relies on entry and spreadsheets – lets break down the expenses involved:
- Total processing cost: 100 reports x $58 per report = $5,800 (A)
- Number of erroneous reports: 20 (20% of total reports) (B)
- Cost to correct errors: 20 reports x $52 per correction = $1,040 (C)
- Overall cost of managing expenses manually: A + C = $6,840 for 100 reports
- This amounts to roughly $68 per expense report.
When choosing Expense Management Software (EMS) for small business, the monthly cost could go down to $5 for each user who’s currently active every month. The total expense of using the software can be calculated by considering an accountant’s wage. The number of expense reports handled during that period.
The information below is useful:
- By using automated Expense Management Software can cut down the time needed to handle a report by one third conveniently for our case’s sake let’s think about a 50 percent drop, in processing time resulting in saving 10 minutes.
- In one hours’, time the accountant can process six or more expense reports efficiently.
- The typical pay, per hour, for an accountant amounts to $29.
- When using an automated tool to flag expense policy breaches and errors in reports for corrections is implemented; the only expense involved is the time taken to resend those reports.
- If 20 percent of expense reports contain errors, it leads us to believe that accountants will likely come across at least one inaccurate report every hour.
- An accountant handles five expense reports per hour for a fee of $29 each time.
- The average expense per report totals around $11, calculated by dividing $29 by 5 and adding a $5, for expenses.
The ROI, for every expense report can be determined by subtract 11 from 68 and then divide the result by 11; this gives an ROI of around 5 times or 500% of your investment amount.
Non-monetary advantages of utilizing Expense Management Software
The data shows that it’s a move for businesses with travel costs to invest in expense management software.
Higher retention rates
Are you aware that when employees experience delays, in getting reimbursed they may start looking for job prospects because of it?
According to a study 70 percent of employees will think about quitting their job if they often face delays in getting reimbursed.
When you depend on procedures to handle tasks one by one in a process flowchart can cause delays that might hold up the reimbursement process longer than necessary. On the other hand, using expense management software enables you to spot any obstacles along the way and address them promptly to keep things moving smoothly and get reimbursed faster.
An increase in employee satisfaction
When an employee puts their money into the company, they work for it’s like they’re lending a hand to the business directly as an investor themselves, without expecting any interest in return. This means paying back these funds promptly can be beneficial for everyone involved. It’s a strategy that can boost employee morale and strengthen the bond of trust within the company.
Conclusion
To sum up the discussion, on Expense Management Software (EMS) its implementation goes beyond cutting costs. It introduces a way of handling finances that can deliver significant ROI (Return on Investment). By minimizing errors and speeding up reimbursement processes while also promoting a workplace atmosphere EMS doesn’t just streamline operations but also enhances employee commitment and happiness.The persuasive evidence shows that for every dollar invested in expense management tools companies can anticipate a gain showcasing the software’s worth, in both financial and non financial aspects. In the business world today it’s crucial for companies to improve their plans by investing in strong expense management tools. This isn’t just a move. It’s necessary for lasting success and growth.