The hidden costs of manual expense management

As your company grows, expenses tend to grow just as fast, if not faster. Having a strong expense management process ensures that you can sustain a healthy growth year after year.

But have you considered what it is costing you to organize business expenses?

When performed manually, expense management can distract your accounting team from more meaningful tasks, invite human error, and increase the likelihood of fraud. These costs hurt your bottom line and, to make matters worse, can go virtually undetected.

So, how do you address this problem? Read on to discover the hidden costs of manual expense tracking and how automation is the solution.

How manual expense management costs you

The burden of manual expense management goes beyond the excess labor costs associated with this time-intensive process. It also stacks up indirect costs from these main culprits:

• Human error and inefficiency
• Employee dissatisfaction
• Expense report fraud
• Poor visibility on company expenses

Human error and inefficiency

Managing and tracking business expenses involves several phases. Each one introduces new opportunities for mistakes or delays. These errors and time lags can amount to hundreds of thousands of dollars wasted or inefficiently spent.

Some of the common problems include:

• Lost receipts and delayed receipt matching
• Improperly filled or incomplete expense reports
• Delayed expense report submission
• Clerical errors and time wasted in manual data entry
• Duplicate expense reports
• Time wasted approving expense requests and validating expense reports

While it’s true that everyone makes mistakes, even the smallest errors in expense management are far from trivial. In fact, they can add up rapidly, hurting your bottom line and wasting the valuable time of skilled employees.

According to the Global Business Travel Association, each year, companies process an average of 51,000 expense reports, adding up to:

• About half a million dollars spent on expense report processing
• Approximately 3,000 hours correcting expense reports each year
• With each expense report costing an additional $52 to correct

About 19% of expense reports are delivered with errors or omissions. As a business owner, you know that if any other process showed a one-in-five chance of failing, you would replace or improve it immediately.

This means that not only is traditional expense management often inefficient and ineffective, but businesses are also underprepared to deal with issues of noncompliance and abnormal expense submissions.

While a diligent accounting team will do their best to mitigate these issues, such tasks are often a misuse of their skill set. For this reason, companies should be looking for an expense management solution.

Employee dissatisfaction

A hidden cost that often goes overlooked is employee dissatisfaction, stemming from many aspects of manual expense management. The reasons include:

• The sheer need to pay out-of-pocket for business expenses
• Delays in receiving expense reimbursements
• The tedium of the expense reporting process
• The frustration and tedium of manual data entry

According to the results of a study on worker attitude toward expense reports:

• More than 33% of employees don’t report expenses because they feel the return is too small to warrant the effort
• Another third of workers feel financially unstable when forced to take on unexpected or large expenses on behalf of the company
• About one-quarter of workers surveyed reported canceling or postponing meetings to avoid paying those costs out of pocket
• A full 62% of employees view the experience as frustrating and slow

These numbers indicate that employees faced with manual expense management not only feel dissatisfied, but they also purposefully avoid certain aspects of the job to avoid having to pay out of pocket.

Automating your expense management process not only saves you money on labor and error mitigation, it enhances employee experience, thus contributing to a happier, more productive workforce—even if just by removing one headache each month.

Reporting fraud and mistakes

Manual expense management makes it far too easy to commit expense report fraud. Whether it’s intentional or simply an accident, fraud is needlessly costing you money.

The most common types of expense report fraud are:

• Inflated expense claims: Some employees alter a receipt or invoice to receive a reimbursement that is larger than what they actually paid out of pocket
• Mischaracterized expenses: When employees claim personal expenses as business expenses, such as date nights or vacations on the company’s dime
• Multiple claims: The exact same expense report may be submitted various times under the noses of approvers
• Falsified claims: Employees will either make a claim using someone else’s receipt or falsify documents in order to claim a reimbursement for money they did not spend

Fortunately, expense automation can prevent all of these occurrences. While expense automation doesn’t eliminate fraud entirely, robust expense management software can significantly reduce it.

According to the Association of Certified Fraud Examiners, losses due to fraud can decrease by as much as 54% when anti-fraud controls are put in place, and fraud detection becomes 50% faster.

Here are just some of the reasons why:

• Expense automation software can instantly prompt an employee to submit a receipt after a purchase has been made
• Automatically match purchases with receipts, preventing falsified or inflated claims
• Have immediate visibility on reimbursement history to detect duplicate expense reports

These benefits can be maximized when your spend management platform is directly built into your corporate card.

Poor visibility on company expenses

Manual expense management, which can range from paper files to hard-coded spreadsheets, offers very little visibility into your company spend. This low visibility could be costing you thousands of dollars, because:

• Employees that submit fraudulent or noncompliant expense reports can go undetected for long periods of time, even committing multiple infringements under your nose
• Lack of controls and swift approval processes can result in overpaying vendors, which can add up rapidly
• Redundant SaaS expenses may go unnoticed, costing you money on services you don’t even use
• Potential savings opportunities may get lost in the fold
• Tax season can become chaotic, putting you at risk for potentially damaging audits and preventing you from identifying business tax deductions

When you automate your expense management with a software solution, you gain access to valuable spending data that could increase your savings and improve your bottom line.

How Ramp's automation eliminates the hidden costs of expense management

Manual expense management drains more than just time from your finance team. It creates compounding costs through delayed reimbursements, duplicate payments, and policy violations that slip through the cracks. When employees wait weeks for reimbursements or finance teams spend hours matching receipts to transactions, the true cost extends far beyond the obvious inefficiencies.

Ramp's automated expense management platform addresses these hidden costs at their source. The platform's real-time receipt matching uses OCR technology to instantly capture and categorize expenses as they occur, eliminating the back-and-forth between employees and finance teams.

When an employee makes a purchase with their Ramp card, the system automatically prompts them to upload a receipt, whether via text, mobile app, or email, matching it to the transaction within seconds. This immediate capture prevents the accumulation of missing receipts that typically plague month-end closes and creates compliance headaches during audits.

The platform's customizable spend controls act as a barrier against policy violations and unauthorized expenses. You can set merchant-specific limits, category restrictions, and approval workflows that enforce your expense policy before purchases happen, not after. For example, if your policy limits client dinners to $75 per person, Ramp will automatically decline transactions that exceed this threshold, preventing awkward reimbursement denials and the administrative burden of processing exceptions.

Ramp's automated workflows also eliminate the hidden costs of manual review and approval cycles. Instead of finance teams manually reviewing every expense report, the platform automatically flags outliers and policy violations for review while auto-approving compliant expenses.

This intelligent automation reduces processing time from days to minutes, freeing your team to focus on strategic analysis rather than administrative tasks. The result is faster reimbursements for employees, fewer errors and duplicate payments, and complete visibility into spending patterns that would otherwise remain buried in spreadsheets.

Modernize your expense management

The key to improving your business’s expense management is to ditch the manual processes and invest in a best-in-class expense management solution. Better yet, get one that is synced directly to your corporate card, like with Ramp.

Re-invigorate your accounting team by taking manual data entry out of their hands and replacing it with more valuable tasks. Improve employee morale by making expense reporting a breeze. Try an interactive demo and see how Ramp can help.