If you're prone to nostalgia, you might pine for old-school objects: typewriters, eight tracks, and rotary telephones come to mind. However, your business deserves the modern touch. Otherwise, the following risks might result from your outdated reporting processes.
Old-school reporting methods often go hand-in-hand with missed opportunities and wasted time. Employees spend hours every year on expense tracking when they could be landing new clients or nurturing leads.
If you embrace modern methods, however, your employees can spend their time on their job responsibilities. When they use modern practices such as prepaid debit cards for company expenses, they have more time and energy to increase productivity and have to worry less about tracking their expenses. PEX customers save 12 hours per month on average.
Lack of Control
Outdated reporting processes
are often the definition of chaos. Every employee uses a different payment method, which means you have no control over their spending habits.
If you hand over a corporate credit card, you're left to the mercy of the lender in terms of credit limits. Plus, expense abuse can run rampant and the chaos of receipts and reimbursements leaves you vulnerable to human error.
The lines get blurred when you don't have boundaries in place to control and curtail employee spending. Workers expense gray-area purchases that you'd prefer not to approve, but all you can do is react. The employee might get a few stern words from the finance department, but the damage is done.
Using prepaid debit cards allows you to place limits on employee spending. You can even narrow down the limits by merchant category. For instance, you'll approve a stop at the gas pump for fuel but not a shopping spree on snacks at the gas station convenience store. The card takes care of the policing.
Outdated reporting procedures are practically an invitation for your employees to give in to temptation. It's an unpleasant thought, but a small minority of your staff might take advantage of the opportunity to charge a non-business expense on the corporate dime.
Of course, some forms of expense fraud
are accidental. Your employee doesn't have to be a mustache-twirling villain to transpose a couple of numbers on a spreadsheet or mislabel an expense.
The old-school method of financial reporting requires employees to front expenses for the business. Every time they dip into their own pockets, they might feel a stab of resentment. This is especially true for younger employees who haven't built big savings accounts and who do not have ready access to credit.
The longer your company takes to reimburse employees, the worse employee morale gets. They can't save for items they want to buy or use their cash to earn interest.
It's difficult to scale your business when you're dependent upon an outdated reimbursement model. You're constantly playing catch-up in employee reimbursements and replacing petty cash. It's no way to build a solid foundation for future growth.
Fortunately, however, you don't have to put your business at risk. If these outdated reporting processes go the way of cassette tapes and boom boxes, you'll have a more predictable financial future and greater control over employee spending. Plus, your employees will feel more confident in their own finances and more eager to work hard for your business.