In this article, we will highlight our top 4 reasons why managing your receipts manually is a bad idea, and how it’s hurting your company more than you know.
Managing receipts is arguably one of the most important tasks of any business owner. It helps you keep track of every dollar that goes out of your company, which then guarantees that your spending efforts are optimised.
However, most small businesses choose to manually track expenses with spreadsheets and clipping their paper receipts together with an expense report. While this may seem like a cheaper and easier option, it is unfortunately not.
In this article, we will highlight our top 4 reasons why managing your receipts manually is a bad idea, and how it’s hurting your company more than you know.
It’s Time-Consuming
You may think that your business is relatively small, and that there is no point in spending a huge sum of money on automating your expense management process. But in reality, you may be spending more hours than you realise in collecting, compiling, and documenting receipts.
There is a high possibility of you leaving this task to the very last minute, which would result in you spending hours working overtime just to document your company’s expenses. In the image below, we highlight the process of manual expense management.
Of course, the process highlighted above assumes that everything goes smoothly when managing your company’s expenses. But in reality, delays and unexpected circumstances happen. Here are some familiar scenarios that may have caused you delays previously:
- Staff members were late in submitting their receipts.
- Managers have gone on leave, which means that there’s a delay in approving the expenses.
- There’s not enough cash on hand to give staff, which means you’ll need to make a trip to the ATM to get cash.
- A receipt may have been lost, and it may take time to retrieve or request a copy of the receipt from the vendor.
This tedious process can take up to 6 hours of your time every month. Logically, you could be using that time to do more important tasks.
Manually Managing Receipts Makes You Susceptible To Human Error
Humans make mistakes, which is why machines and automation are used to help with a multitude of functions - including data entry.
Manual entry is not only the act of keying in data. In fact, it also involves the following tasks:
- Receiving the data
- Understanding the data and its meaning
- Understanding the system and learning how to enter data into it
- Entering the data
- Checking the data for accuracy
Looking at the process above, it’s easy to see how manually tracking receipts and expenses can be prone to error. Even the most experienced finance personnel will not be able to manage this task without mistakes, especially when dealt with too many receipts and expenses.
Mistakes in documenting receipts can also be time-consuming, as you would need to be rectifying and consolidating the mistake.
It Is Not A Long-Term Solution
In a small business, you may be more concerned with staying afloat and working on the day-to-day activities which need your immediate attention. Hence, thinking about automating your expense management is probably not on your list of priorities.
But it’s never too late to start planning for the longevity of your business.
What if your current customers, staff, vendors, and overall size of your company grows? Using one staff member (or yourself) to manage all the expenses is not a feasible solution. This is because you’ll probably have ten other things to manage, and as mentioned earlier, managing multiple things simultaneously gives way to more mistakes.
The truth is, managing expense receipts is a mundane and boring task which no one likes to do. If you’re thinking about hiring finance personnel to help you with this task in the future, chances are your staff would find it much more productive and enjoyable to perform other tasks such as budget planning, rather than collecting receipts.
In fact, recent statistics have shown that 90% of employees are currently loaded with boring and repetitive tasks which could be easily automated, which leads to them spearheading the charge in automation. So as a business owner, finance automation is bound to happen sooner or later.
Your Business Will Risk Overspending
You may be thinking that it saves cost to manually handle your expenses and receipts, but you are actually at risk of spending more money than intended.
Let’s assume that an average employee spends 6 hours a month manually managing expense receipts. If they are paid an average salary of $25 an hour, that would be $150 worth of expenses simply on data entry.
There are also the indirect costs of errors in manual expense management - such as forgotten expenses, the incorrect amount entered, and duplicate receipt entries. These mistakes can cause your company money and impact your bottom line.
Recent research has shown that companies can save up to 70% of costs when they automate their finances. Why spend $150 on manual work, when you can automate your expense process from as low as $10 a month?
At Budgetly, our expense management solution offers an easy way of capturing and keeping your receipts all in one place. We offer packages from as low as $10 a month, so you can spend less time and hassle on manual receipt management, and focus on what really matters - your business.
To learn more about Budgetly and how we help small businesses, download our eBook: Managing Expenses with Budgetly, and let’s start your finance automation journey.
