What is Expense Approval Time?
Expense Approval Time refers to the duration taken to review, verify, and approve an expense claim submitted by an employee or department.
It starts from the moment an expense report is submitted to the time it gets approved by the relevant authority, usually the finance department or a manager.
Importance of Expense Approval Time
Understanding and optimizing Expense Approval Time is crucial for several reasons:
1. Cash Flow Management: A swift approval process ensures that reimbursements are made promptly, aiding in better cash flow management.
2. Employee Satisfaction: Delays in expense approvals can lead to employee dissatisfaction. Quick approvals mean employees are reimbursed without unnecessary delays.
3. Operational Efficiency: A streamlined approval process can significantly improve operational efficiency, ensuring that resources are not wasted in prolonged waiting times or repeated follow-ups.
Why Expense Approval Time is so important?
Calculating Expense Approval Time
Expense Approval Time = Date of Approval−Date of Expense Submission
If an employee submits an expense report on January 1 and it gets approved on January 4, the Expense Approval Time is:
Expense Approval Time=4−1=3 days
Expense Approval Time vs Other Metrics
By understanding the difference between these metrics, businesses can better pinpoint areas of improvement in their finance management processes. Expense Approval Time should not be confused with other related metrics:
1. Expense Processing Time: This is the total time taken from submission to payment, including approval and payment processing times.
2. Expense Report Accuracy: This metric evaluates the correctness of the expense reports. A report with errors can increase the approval time as it might be sent back for corrections.
|Importance in PSA
|Expense Approval Time
|The time taken to approve and reimburse expenses submitted by employees or contractors.
|Significant, affects financial management and employee satisfaction.
|Measure of the overall profitability of individual projects or client engagements.
|Essential, as it impacts the financial success of the organization.
|The percentage of time spent on billable client work versus non-billable activities.
|Critical, directly related to revenue generation and resource allocation.
|Efficient allocation of resources based on skills and availability for projects.
|Vital for optimizing resource usage and project delivery.
Utilizing Expense Approval Time in Business
Expense Approval Time can be a valuable metric for businesses, especially those using Professional Service Automation (PSA):
1. Budgeting & Forecasting: By understanding how long approvals take, finance teams can better forecast cash outflows related to reimbursements.
2. Resource Allocation: If the approval process is lengthy, it might indicate a need for more resources in the finance or approval departments.
3. Policy Refinement: Regularly reviewing Expense Approval Time can help businesses refine their expense policies, ensuring they are both employee-friendly and fiscally responsible.
Ready to Optimize Expense Approval Time?
KEBS, a leading PSA Software, offers tools that can significantly reduce Expense Approval Time. With KEBS, businesses can set up automated approval workflows, ensuring that expense reports reach the right approvers swiftly.
Approvers receive instant notifications, reducing the waiting time for employees. KEBS seamlessly integrates with finance management software, ensuring that once an expense is approved, the reimbursement process starts immediately. By leveraging KEBS, businesses can not only optimize their Expense Approval Time but also enhance other aspects of their operations, from project management to deal management.