Planning efficient expense pre-approvals

April 30, 2021

6 min read

Picture of Certify Team

Certify Team

What if you could be more proactive about tracking employee expenses? With a pre-approval solution, you can monitor spend before it happens, and automatically enforce policy before expenses are incurred.

Pre-approvals allow you to dramatically cut wasteful and costly employee expenses. With a rules-driven workflow, you can ensure employees expenses are compliant which helps avoid incurring unnecessary costs.

This article will examine the essential elements of an expense pre-approval process and how to enhance your overall expense management.

Why pre-approvals are important

A pre-approval process is important because it allows an employee to create a report and apply for expenses before traveling on a business trip, so they don’t have to pay out of their own pocket. All an employee needs to do is ensure they have access to funds on a trip is to complete a pre-approval form detailing the expense requested, estimated cost, and duration of their travel plans.

In companies without a pre-approval process, employees have to pay for expenses out of their personal funds and then apply for reimbursement from the company. The procedure typically takes 30-days, meaning that employees have to wait for weeks to be paid back for business expenses that they've paid upfront.

Using digitized pre-approvals ensures that employees have access to a company's funds before making a purchase. Approving expenses in advance eliminates the frustration of waiting for reimbursement on the employee side but also makes it easier for accounts payable teams to monitor expenditure more effectively.

For instance, after an employee returns from a business trip, the finance team can compare their pre-approval application to the end expense report and review whether the estimated expenses matched the actual final total of the trip, which can help calculate the value of the travel.

By increasing transparency over the expense process, pre-approvals provide information that accounts payable teams can use to improve decision making and detect non compliance. Better financial management means less opportunity for chaotic spending.

Building an efficient pre-approval process

There are a number of fundamentals you need to have to create a streamlined and effective pre-approval process:

1. Let the solution manage expense requests

An effective pre-approval process starts with making it easy for employees to enter expenses. Automated expense management software like Emburse Certify handles this as part of the solution itself, so there is no need to use multiple systems or manual methods. This request records essential information such as the service provider's name, the cost, whether the payment is one-time or recurring, invoices, or any other relevant documentation.

2. Automate the approval process

Pre-approvals work best when they are automatically routed to the correct people for quick review. When an employee creates a spend request, all relevant details are sent along. The approver can review for policy or comment, it can be tagged by category, such as hotel, airfare, or rental car, and routed to the correct person for approval.

Using Certify, you can easily set up these pre-approval workflows. Real-time alerts can warn managers when an expense is being incurred, before spend happens.

This process can be monitored, and reported on as well. This can let you identify bottlenecks in pre-approvals, be alerted to suspicious activity before it becomes a problem, and helps enforce corporate policies.

3. Implement multi-level workflows

Add different levels of approval for various expenses as an excellent way to control costs more efficiently. For example, you can set multi-level approval workflows that automatically approve smaller payments, but require multiple approvers to sign-off on larger expenses.

The rationale behind multi-level approval workflows is that larger expenses can significantly impact your overall budget, so having multiple approvers can ensure that you only approve legitimate expense reports.

4. Leverage virtual credit cards

Administrators can issue new virtual and physical cards from within Certify. They’re easy to manage and provide greater control over spending.

Controlling spending through an employee card is a smart move for frequent travellers. These cards can be physical, or virtual, and benefit from deep, granular policy controls. For example, certain employees can be given access to, or restricted from, expensing certain categories such as airfare or lodging. You can even set restrictions on the time of day, or deactivate a card that becomes compromised.

A corporate card program reduces the likelihood of fraudulent receipts and exaggerated expense claims. It also provides a more convenient experience for employees who can purchase items more easily. The real-time alerts and insight into pending transactions make it easier to capture the documentation finance teams need to.

Control spend before it happens

Create a more efficient and transparent expense process with pre-approvals in Certify. Staff can submit an expense report more conveniently while avoiding chaotic spending at a departmental level. In short, a finely-tuned pre-approvals pipeline makes a company’s finances much simpler to manage.