Small businesses can take the pain out of meeting EOFY tax-time requirements by ditching the shoebox overflowing with expense claims and invoices.
CreditorWatch spoke to Concur, an expense management solutions provider, to find out more about how small businesses can better manage their invoices and expense claims at tax-time.
According to Murray Warner, director business development Asia Pacific, Concur, when EOFY rolls around, the financial controllers of small businesses with ad-hoc systems of financial record can find themselves racing around on a wild goose chase and, consequently, working nights as well as weekends to meet tax-time deadlines. In addition to being a costly and time consuming exercise, Warner said this can also be embarrassing for a business.
He described the frustration for financial controllers of having to chase up a $10,000 invoice that’s sitting with a manager who is on holidays or chase up employees who have not submitted their expense claims at EOFY. On top of this, if a business is taking more than a few weeks just to process an invoice, because they don’t have a formal system in place, it is likely they will not be able to process invoices that come in on the eve of the EOFY and their reporting and working capital will ‘take a hit’.
Oversight of expenses
Warner said an automated expense and invoice system will help prevent these desperate, last-minute tasks. A system with an optical character recognition (OCR) will allow users to take photos of their receipts and upload the data instantly. The ability to import company cards into automated systems also eliminates the need to manually key in data. Further, companies can build their expense policy into the system to ensure proper oversight of expenses.
“For example, if employees are required to attend entertainment, the system could force you to enter attendees before allowing you to submit an expense report”, Warner explained.
“If you work at a company that still operates manually, they might have a printout of an excel spreadsheet of somebody’s expenses with all their receipts stapled to it and somebody in finance would be keying all that data into the financial system. This approach basically disappears when you have an expense management system because the data feeds directly into the finance system.”
GST and FBT reporting requirements
Warner said automated expense systems are useful when a business is trying to meet requirements around reporting GST and fringe benefit tax (FBT).
“For most businesses, the process of determining whether they can reclaim GST is very manual. The ATO has very specific rules around what can be reclaimed. For instance, there has to be a valid tax invoice that has an ABN. Without an automated system, this is a very tedious and manual task that usually involves going through paper receipts one by one.”
“Similarly, automated systems allow businesses to keep a record of which employees have attracted FBT and, consequently, their liability to pay FBT. Without an automated system, finance teams have go through entertainment expenses one by one, figure out who the attendees were and base their calculations on that. Without automated systems, GST and FBT reporting requirements can be extremely painful.”
Help workers focus on they real jobs
Not only does an automated expense and invoice system help financial controllers manage their work load more efficiently, it also assists staff who submit expenses frequently, including sales people and other employees required to travel.
“At the EOFY, sales people are usually out there selling and trying to hit their targets,” warner said.
“So, doing their expenses is the last thing on their mind. They usually get around to doing their expenses report the day after EOFY, which causes stress for the people in finance.”